Brazil

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Under the Treaty of Tordesillas, everything to the east of the line that ran from pole to pole 370 leagues west of the Cape Verde Islands was to be Portugal's to exploit. The exact reason for Portugal's interest in having the line so far to the west is debatable, but the Portuguese may have been trying to keep the Castilians away from the sure route to the East. Very practically, the line's placement gave Portuguese vessels en route to India ample room to pick up winds and currents that took them around the southern end of Africa, a feat carried out by Vasco da Gama on his voyage of 1497-99. The Portuguese also may have known that western lands or islands lay on their side of the line. On the modern map of Brazil, in the north the line cuts across the eastern end of the Ilha de Marajó, and in the south it passes through Laguna on the coast of Santa Catarina. Because most of present-day Brazil lies to the west of the line, clearly the Portuguese expanded successfully on this initial division.

The territorial aggrandizement, which is one of the main themes of Brazilian history, was both accidental and a matter of state policy. Uncertainty as to the detailed geography of South America persisted into the twentieth century, so it is understandable that Portuguese officials professed to believe into the eighteenth century that the estuaries of both the Amazon and the Río de la Plata were on their side of the Tordesillas Line. The two river systems were, in the words of the Jesuit Father Simão de Vasconcellos, "two keys that lock the land of Brazil . . . two giants that defend it and demarcate between us [Portuguese] and Castille." Several centuries of penetration along these river systems gave Brazil its distinctive shape. It could be said that today's Brazil owes its vast territory to the native Indians who served as skilled trackers, warriors, porters, food suppliers, and paddlers for the Portuguese expeditions, and to the Indians whose potential as slaves lured the Portuguese inland.

The Portuguese empire at the outset was a commercial rather than a colonial one. Portugal lacked sufficient population to establish colonies of settlers throughout its maritime empire. The Portuguese practice was to conquer enough space for a trading fort and a surrounding enclave from which to draw on the wealth and resources of the adjacent country. A map of this maritime commercial domain would show a series of dots connected by sealanes rather than continuous stretches of territory. French competition forced the Portuguese shift to colonialism in Brazil. This shift involved the gradual move from trading for brazilwood to cultivating sugarcane, which required control of great expanses of land and increasing numbers of slaves. The first to burst past the Tordesillas Line were the slave hunters. The shift to colonialism was also facilitated by the union of the Spanish and Portuguese crowns between 1580 and 1640. Although the two governments on the Iberian Peninsula and in the Americas were kept separate, trade and travel controls became lax. An active contraband trade developed between Brazilian settlements and Buenos Aires, and Portuguese moving overland appeared in Asunción, Potosí, Lima, and even Quito.

Expansion along the Atlantic coast had been gradual. Using the model of the Atlantic islands, the crown in 1536 divided the Brazilian coast into fifteen donatory captaincies (donatários ). To induce settlement, the crown offered ten leagues of coastline as personal property, a percentage of the dyewood trade, control over trade of enslaved natives, as well as the exclusive right to build mills. In 1580 Brazil comprised the area from Pernambuco in the north to São Vicente in the south. With Spanish assistance thereafter, the Portuguese expanded north to Paraíba, then west through Ceará and Maranhão against the natives and the French, until they founded Belém in 1616. Beginning in 1621, these possessions were divided into the state of Maranhão (embracing the crown captaincies of Ceará, Maranhão, and Pará) and the state of Brazil, centering on Salvador, Bahia. The reassertion of Portuguese independence under the Braganças in 1640 led to sporadic conflict in frontier areas and to policies seeking to hold back Spanish advances. In the Amazon and Río de la Plata river basins, the Spanish rather than the Portuguese had been first on the scene. The Spaniards included Álvar Núñez Cabeza de Vaca, who journeyed from the coast of Santa Catarina to Asunción in 1540, and Francisco de Orellana, who descended the Amazon in 1542.

The most important Spanish advances were the mission settlements, where the Jesuits Christianized native peoples. Two areas of particular importance lay adjacent to the river systems that delimit Brazil in the south and in the north: the Paraná-Paraguay Basin in the south and the Mamoré-Guaporé Basin in the north. From 1609 to 1628, the Jesuits founded eight missions among the Guaraní peoples between the Paraná and Paraguai rivers in what is now southern Paraguay. They pressed deep into what is today the state of Paraná, between the Ivaí and Paranapanema rivers, to establish fifteen more in what was called Guairá Province.

On April 22, 1500, the thirteen-ship fleet under Pedro Álvares Cabral anchored off the mouth of the Rio Buranhém (sweet bark in Tupí) on the Bahian coast. The chronicler of the discovery, Pêro Vaz de Caminha, wrote that immediately they saw men walking on the beach, and by the time a longboat reached the shore twenty or so had assembled. Entirely naked and dark skinned, they laid down their bows and arrows as a sign of peace, while responding to offers of Portuguese hats by giving over a parrot-feathered headdress and a long string of white seed pearls. Thus did the cultural exchange begin that would evolve over the next five centuries into the distinctive Brazilian culture.

In the nine days that the Portuguese stayed at the anchorage they called Porto Seguro, the natives were fascinated by the Catholic Mass, the iron tools, and alcoholic drink. Their seeming receptivity and lack of religious symbols that the Portuguese could understand caused Caminha to predict that these people quickly would turn Christian.

The natives helped fill a ship with fine-grained timber, dyewood, and presumably some of the buranhém wood or bark that gave the river its name. Cabral sent the ship back to Lisbon with Caminha's oft-quoted letter to the king, the first report on Brazil to reach Europe. As the rest of the fleet set sail from what Cabral called the Island of Vera Cruz for the Cape of Good Hope, two male convicts were left on the shore. Rather than execute such degredados (outcasts; see Glossary), the Portuguese were instinctively creating an advance guard that would learn the local language and via intermarriage would give them in another generation the means to penetrate both the indigenous societies and the Brazilian land mass.

After so many years of remarkable contacts with newly discovered lands, the Portuguese were a bit blasé about the news of this land of parrots, naked people, and brazilwood. At that time, peppers, spices, and silks were worth more than such exotica, and those products came from India and lands farther east.

With the exception of the New Christian (Jewish converts) investors, Brazil received little attention from Lisbon for three decades. The investors scouted and defended the coast and shared with the crown their monopoly contracts to harvest the brazilwood. The Portuguese monarchs followed the practice of holding legal title to lands and to certain commodities but issuing to others licenses to profit from these lands and commodities at their own expense, or with the backing of other investors. The custom was akin to the Castilian practice of adelantado (awarding of conquistador status--see Glossary) that developed during the reconquest of the Iberian Peninsula from the Moors, whereby the crown commissioned an agent to conquer a certain area at his own expense in return for rights to land, booty, and labor. The combination of royal licenses and private initiative that worked so well for Portugal along the African coast and in India was reshaped for Brazil.

But soon other Europeans were challenging Portugal's claims to exclusivity. Spanish captains edged their ships down the coast and up the Río de la Plata. From 1504 onward, French vessels from Brittany, Flanders, and Normandy were active in the dyewood trade. The reddish-purple dyes made from the wood brought good prices from tapestry and textile makers, and the French court ignored Portuguese protests. The Portuguese sent out naval expeditions to destroy French vessels and outposts, but by 1530 it was clear that mounting an effective coast guard along thousands of kilometers with countless coves, anchorages, and bays would be impossible; Portugal either had to take active possession or lose out to more interested rivals. Portugal took two steps, one immediate and the other long term. It dispatched a strong fleet under the command of Martim Afonso de Sousa, who was instructed to clear the coast of interlopers and to establish a permanent settlement. The result was Brazil's first European town, São Vicente, established in 1532.

In addition to dealing with labor supply, Mem de Sá, who was the consolidator of Portuguese Brazil, dealt successfully with the French threat. The French had continued to attack Portuguese shipping and to maintain interest in a permanent colony. Noting that Rio de Janeiro's Guanabara Bay had not been occupied, Vice Admiral Nicolas Durand de Villegaignon, a French navigator, led a mix of Huguenots and Catholics there in 1555 to establish a colony, France Antarctique, on Ilha de Sergipe. After a decade, his utopian dream of finding a religious refuge for Protestants and Catholics failed. Despite their good relations with the Indians, the French could not withstand the Portuguese assaults that began in 1565. That year, to ensure future control of the bay, Mem de Sá founded the city of Rio de Janeiro, which became the second royal captaincy. Expelled from Guanabara Bay in 1567, the French turned their efforts to the northern coast. They made alliances with the Indians and settled themselves on Ilha São Luís do Maranhão in 1612, where fierce fighting led to their expulsion in 1615. They kept active north of the Amazon delta, maintaining claims to Amapá.

By 1580 the Portuguese had overcome French threats and most indigenous resistance to their command of key ports. At this point, a more profound Spanish threat appeared with the passing of the crown of Portugal to King Philip II of Spain. This event had immediate and long-range consequences. Now Europe's two greatest empires were united under a single ruler and could well have been joined permanently, save for the determination of the Portuguese to maintain their identity. The Iberian union gave the Portuguese easier access to the Spanish domains. For Brazil, however, the most important result was that it made enemies of Portugal's former business associates, the Dutch. Portugal's commerce was more open than Spain's and perhaps more practical. Portugal recognized its need for shipping and for access to markets, both of which the Dutch provided for Brazilian sugar. The spirit of cooperation faded with the union of the crowns as the Dutch, long struggling for independence from the Spanish Habsburgs, were shut out officially from the Portuguese domains. This exclusion led to the formation of the Dutch West India Company in 1621 and the seizure of Brazilian sugar lands. After being unsuccessful in holding Salvador in 1624-25, the Dutch captured Pernambuco in 1630 and eventually extended their sway from the Rio São Francisco to São Luís do Maranhão until finally being forced out in 1654.

The Dutch incursion was the longest and most serious challenge to Portuguese control by a major maritime power. The struggle to drive out the Dutch had devastating effects on the sugar plantations and sugar mills. The Dutch, particularly Governor Johan Maurits, Count of Nassau, had worked to build good relations with the Portuguese planters in the interior, supplying them with credit, slaves, merchandise, and European markets. Nassau encouraged religious tolerance, constructed buildings and canals in the style of Amsterdam, and brought in artists, engineers, and scientists to embellish, record, and study the local flora, fauna, and peoples.

Portugal and its Brazilian subjects had divergent interests in responding to the Dutch. When the Duke of Bragança took the throne as João IV in 1640, his government faced the determination of Philip IV to reconquer Portugal, and he therefore needed to maintain peace with the rest of Europe. As much as the Portuguese economy needed the revenues from the sugar trade, the court had to face the reality that in Europe the Dutch dominated a good portion of that trade. Thus, if Por-tugal attacked Dutch-held Pernambuco, it would earn an enemy in Europe and lose access to the market. At the same time, the king understood the importance of Brazil when he called it his milk cow (vaca de leite ). Indeed, historian Charles Boxer asserted that Portugal's independence depended chiefly on the Brazil trade, which centered on sugar and slavery.

The Dutch did not show the same hesitation. In 1641 they seized Luanda, an important source of African slaves, in violation of a truce with Portugal. Holland now held sugar and slave ports in the South Atlantic and the distribution system in Europe. Although Lisbon could not merely abandon its subjects in Brazil, it realized that it would be foolhardy to fight for the sugar area without also regaining the source of African slaves.

The colonists in the Dutch-occupied area played their own game of deception. They borrowed Dutch money to restore their war-torn plantations and engenhos and to buy slaves, but they realized that their long-term interests lay in expelling the Dutch and with them their indebtedness. After 1645, together with the governor general in Bahia, they conspired, rebelled, and fought against the Dutch. Their victories of 1648 and 1649 at the Battle of Guararapes in the Recife area of Pernambuco are commemorated today. However, after nine years of war the scorched-earth tactics had ravaged the region. Although sugar prices rose in Europe, Brazilian planters could not respond and permanently lost their leading market position. The Dutch and English set up plantations in Suriname and Barbados, taking advantage of the techniques developed in Brazil and their better access to capital, merchant fleets, and the northern European market. Although there were years of recovery (1665-80, 1698-1710), sugar was no longer the foundation of the Brazilian economy. Northeastern Brazil entered into a long stagnation, and Portugal, which now depended heavily on Brazil after its losses to the Dutch in the East Indies, watched its economy deteriorate.

Brazil - Gold Mining Displaces Cane Farming

The decline in the sugar economy cut off the smaller Northeastern cane farmers from the customary paths to higher socioeconomic status, producing a situation in which this potentially powerful segment of the population no longer had reasons to support the traditional colonial society. The cane farmers had the same social origins as the wealthier planter and mill-owner class but generally were less independent financially, and now their future was darkened. As sugar prices fell, the planters and mill owners' response was vertical integration; stages of production were consolidated under the control of fewer firms. Purchases from independent cane farmers were reduced and their lands acquired. The situation was potentially explosive. Historian Stuart Schwartz commented that "at no time in Brazilian history had the conditions for a profound social upheaval been more suitable." But it did not occur for two reasons: the cane farmers did not rebel against the sugar barons for fear of encouraging a slave rebellion, and in addition, newly discovered gold fields to the south soon beckoned to free and slave populations. The removal of pressures for change solidified the hold of the great landowners on the coastal plantations.

With the onset of the Napoleonic Wars, some Portuguese officials again raised the idea of moving the crown to the safety of Brazil. Dom Luís da Cunha's prophetic suggestion in 1738 that Rio de Janeiro was "safer and more convenient" made great sense as the French army approached Lisbon in November 1807. The British in 1801 had recommended transfer to Brazil in the event of an invasion and had promised to provide protection for the voyage and assistance in extending and consolidating Portuguese territory in South America. In 1803 the Lisbon government, faced with the increasingly deadly struggle between France and Britain, had reconsidered the idea. The choice was between losing Portugal to the French and having the British seize Brazil, or moving the crown to Brazil, from which the struggle for Portugal could be resumed. In any case, the royal government did not move until Portugal was actually invaded in late 1807.

At the time, the monarch was Queen Maria I, but because of mental illness triggered by her horror at the regicide in Paris, her son Dom João ruled as regent. His wife was Dona Carlota Joaquina, a Spanish princess and mother to their nine children, among whom the most important for Brazilian history was Pedro de Alcântara de Bragança e Bourbon. Dom João opened Brazilian ports to world commerce, allowing British goods to stream in, and eliminating the Portuguese middlemen. Rio de Janeiro substituted for Lisbon in a centralized system that placed the various captaincies in subservient positions to the new center. For the Brazilian elites, the transfer of the court meant that they could have conservative political change without social disorder. And best of all, depending on their proximity to the court, they had the chance to obtain the titles and honors that they felt their wealth had earned them. However, the pleasure of the elites was mixed with some frustration because now the monarch was close enough to keep an attentive watch on how they conducted their affairs. And with the court in Rio de Janeiro, the demands of international politics were more keenly felt.

Portugal and the Bragança dynasty were obligated deeply to the British. The British not only saved the royal family and some 15,000 courtiers but also lent US$3 million in 1809 to keep the government functioning. The British also liberated Portugal from the French and reorganized the Portuguese army. In addition, one of their officers ruled as regent in Lisbon. The Portuguese therefore had little with which to bargain when negotiating treaties. In 1810 Dom João signed agreements not only giving the British trade preferences and allowing them privileges of extraterritoriality but also promising to abolish the African slave trade. The last cut directly at the interests of the propertied classes, on whom the crown depended.

The crown had to duplicate, mostly from scratch, the government institutions it had left behind in Lisbon. It set up a Supreme Military Council (Conselho Militar Superior); boards of treasury, trade, agriculture, and industry; a Court of Appeals; a royal printing press and official newspaper; and the Bank of Brazil (Banco do Brasil). It created medical schools in Bahia and Rio de Janeiro, a school of fine arts, a museum of natural history, a public library, and the Botanical Garden (Jardim Botânico) in Rio de Janeiro. It also set up specialized courses of study in the Minas Gerais towns of Ouro Prêto and Paracatu. Most of the fleet had been transferred, but a new army was organized, naval and military academies were established, and arsenals created. The crown built a powder factory and an ironworks. It dealt with public safety by forming the Royal Police Guard, which brutalized slaves, sailors, drunks, gamblers, and prostitutes into submission. The crown also opened Brazil to European travelers, naturalists, scientists, and artists, who left a detailed picture of its life and landscape.

Curiously, by staying in Brazil after the British liberated Portugal from the French in 1811, the crown was keeping British influence under some control, because here it was removed both from Britain and the British-commanded Portuguese army. In 1815 the crown, determined to set its own course, raised Brazil to a kingdom equal with Portugal and acclaimed João as king when his mother died in 1816. The crown gained further maneuverability by arranging marriages between the two princesses and the Spanish King Fernando VII and his brother, and more important, between Crown Prince Pedro and the daughter of Franz I of Austria, the Archduchess Leopoldina.

Brazil - The Kingdom of Portugal and Brazil, 1815-21

Portuguese businessmen who invested locally in Brazil, nobles and government officials who built expensive homes there, and those who married into provincial wealth shared a common interest in remaining. Indeed, what took shape was a new concept of a dual monarchy of Brazil and Portugal, which even under the best of circumstances would have been difficult to make work. It was an expedient idea that would founder because of resistance by those in Portugal who saw their status and that of the kingdom endangered; by the British, who wanted the king back in Lisbon, where he was more vulnerable; and by the unwillingness of Brazilians to suffer the indignity of being returned to colonial rank.

Dom Pedro meant to rule frugally and started by cutting his own salary, centralizing scattered government offices, and selling off most of the royal horses and mules. He issued decrees that eliminated the royal salt tax to spur output of hides and dried beef, forbade arbitrary seizure of private property, required a judge's warrant for arrests of freemen, and banned secret trials, torture, and other indignities. He also sent elected deputies to the Côrtes in Portugal. However, slaves continued to be bought and sold and disciplined with force, despite his assertion that their blood was the same color as his. In September 1821, the Côrtes, with only a portion of the Brazilian delegates present, voted to abolish the Kingdom of Brazil and the royal agencies in Rio de Janeiro and to make all the provinces subordinate directly to Lisbon. Portugal sent troops to Brazil and placed all Brazilian units under Portuguese command. In January 1822, tension between Portuguese troops and the Luso-Brazilians (Brazilians born in Portugal) turned violent when Pedro accepted petitions from Brazilian towns begging him to refuse the Côrtes's order to return to Lisbon. Responding to their pressure and to the argument that his departure and the dismantling of the central government would trigger separatist movements, he vowed to stay. The Portuguese "lead feet," as the Brazilians called the troops, rioted before concentrating their forces on Cerro Castello, which was soon surrounded by thousands of armed Brazilians. Dom Pedro "dismissed" the Portuguese commanding general and ordered him to remove his soldiers across the bay to Niteroi, where they awaited transport to Portugal. Pedro formed a new government headed by José Bonifácio de Andrada e Silva of São Paulo. This former royal official and professor of science at Coimbra was crucial to the subsequent direction of events and is regarded as one of the formative figures of Brazilian nationalism, indeed, as the patriarch of independence.

The atmosphere was so charged that Dom Pedro sought assurances of asylum on a British ship in case he lost the looming confrontation; he also sent his family to safety out of the city. In the following days, the Portuguese commander delayed embarcation, hoping that expected reinforcements would arrive. However, the reinforcements that arrived off Rio de Janeiro on March 5, 1822, were not allowed to land. Instead, they were given supplies for the voyage back to Portugal. This round had been won without bloodshed.

Blood had been shed in Recife in the Province of Pernambuco, when the Portuguese garrison there had been forced to depart in November 1821. In mid-February 1822, Bahians revolted against the Portuguese forces there but were driven into the countryside, where they began guerrilla operations, signaling that the struggle in the north would not be without loss of life and property. To secure Minas Gerais and São Paulo, where there were no Portuguese troops but where there were doubts about independence, Dom Pedro engaged in some royal populism.

Towns in Minas Gerais had expressed their loyalty at the time of Pedro's vow to remain, save for the junta in Ouro Prêto, the provincial capital. Pedro realized that unless Minas Gerais were solidly with him, he would be unable to broaden his authority to other provinces. With only a few companions and no ceremony or pomp, Pedro plunged into Minas Gerais on horseback in late March 1822, receiving enthusiastic welcomes and allegiances everywhere. Back in Rio de Janeiro on May 13, he proclaimed himself the "perpetual defender of Brazil" and shortly thereafter called a Constituent Assembly (Assembléia Constituinte) for the next year. To deepen his base of support, he joined the freemasons, who, led by José Bonifácio Andrada e Silva, were pressing for parliamentary government and independence. More confident, in early August he called on the Brazilian deputies in Lisbon to return, decreed that Portuguese forces in Brazil should be treated as enemies, and issued a manifesto to "friendly nations." The manifeso read like a declaration of independence.

Seeking to duplicate his triumph in Minas Gerais, Pedro rode to São Paulo in August to assure himself of support there and began a disastrous affair with Domitila de Castro that would later weaken his government. Returning from an excursion to Santos, Pedro received messages from his wife and from Andrada e Silva that the Côrtes considered his government traitorous and was dispatching more troops. In a famous scene at Ipiranga on September 7, 1822, he had to choose between returning to Portugal in disgrace or opting for independence. He tore the Portuguese blue and white insignia from his uniform, drew his sword, and swore: "By my blood, by my honor, and by God: I will make Brazil free." Their motto, he said, would be "Independence or Death!"

Pedro's government employed Admiral Thomas Alexander Cochrane, one of Britain's most successful naval commanders in the Napoleonic Wars and recently commander of the Chilean naval forces against Spain. Pedro's government also hired a number of Admiral Cochrane's officers and French General Pierre Labatut, who had fought in Colombia. These men were to lead the fight to drive the Portuguese out of Bahia, Maranhão, and Pará, and to force those areas to replace Lisbon's rule with that of Rio de Janeiro. Money from customs at Rio de Janeiro's port and local donations outfitted the army and the nine-vessel fleet. The use of foreign mercenaries brought needed military skills. The much-feared Cochrane secured Maranhão with a single warship, despite the Portuguese military's attempt to disrupt the economy and society with a scorched-earth campaign and with promises of freedom for the slaves. By mid-1823 the contending forces numbered between 10,000 and 20,000 Portuguese, some of whom were veterans of the Napoleonic Wars, versus 12,000 to 14,000 Brazilians, mostly in militia units from the Northeast.

Some historians have erred in supporting historian Manuel de Oliveira Lima's contention that independence came without bloodshed. In fact, although both sides avoided massive set battles, they did engage in guerrilla tactics, demonstrations, and countermoves. There is little information on casualties, but the fighting provided a female martyr in Mother Joana Angélica, who was bayoneted to death by Portuguese troops invading her convent in Bahia; and an example of female grit in Maria Quitéria de Jesus, who, masquerading as a man, joined the imperial army and achieved distinction in several battles.

Britain and Portugal recognized Brazilian independence by signing a treaty on August 29, 1825. Until then, the Brazilians feared that Portugal would resume its attack. Portuguese retribution, however, came in a financial form. Secret codicils of the treaty with Portugal required that Brazil assume payment of 1.4 million pounds sterling owed to Britain and indemnify Dom João VI and other Portuguese for losses totaling 600,000 pounds sterling. Brazil also renounced future annexation of Portuguese African colonies, and in a side treaty with Britain promised to end the slave trade. Neither of these measures pleased the slave-holding planters.

Organizing the new government quickly brought the differences between the emperor and his leading subjects to the fore. In 1824 Pedro closed the Constituent Assembly that he had convened because he believed that body was endangering liberty. As assembly members, his advisers, José Bonifácio de Andrada e Silva and Dom Pedro's brothers, had written a draft constitution that would have limited the monarch by making him equal to the legislature and judiciary, similar to the president of the United States. They wanted the emperor to push the draft through without discussion, which Pedro refused to do. Troops surrounded the assembly as he ordered it dissolved. He then produced a constitution modeled on that of Portugal (1822) and France (1814). It specified indirect elections and created the usual three branches of government but also added a fourth, the moderating power, to be held by the emperor. The moderating power would give the emperor authority to name senators and judges and to break deadlocks by summoning and dismissing parliaments and cabinets. He also had treaty-making and treaty-ratifying power. Pedro's constitution was more liberal than the assembly's in its religious toleration and definition of individual and property rights, but less so in its concentration of power in the emperor.

The constitution was more acceptable in the flourishing, coffee-driven Southeastern provinces than in the Northeastern sugar and cotton areas, where low export prices and the high cost of imported slaves were blamed on the coffee-oriented government. In mid-1824, with Pernambuco and Ceará leading, five Northeastern provinces declared independence as the Confederation of the Equator, but by year's end the short-lived separation had been crushed by Admiral Cochrane. With the Northeast pacified, violence now imperiled the South.

In 1825 war flared again over the Cisplatine Province, this time with Buenos Aires determined to annex the East Bank. The empire could little afford the troops, some of whom were recruited in Ireland and Germany, or the sixty warships needed to blockade the Río de la Plata. A loan from London bankers was expended by 1826, and Pedro had to call the General Assembly to finance the war. The blockade raised objections from the United States and Britain, and reverses on land in 1827 made it necessary to negotiate an end to the US$30 million Cisplatine War. The war at least left Uruguay independent instead of an Argentine province. In June 1828, harsh discipline and xenophobia provoked a mutiny of mercenary troops in Rio de Janeiro; the Irish were shipped home and the Germans sent to the South. The army was reduced to 15,000 members, and the antislavery Pedro, now without military muscle, faced a Parliament controlled by slaveowners and their allies.

As coffee exports rose steadily, so did the numbers of imported slaves; in Rio de Janeiro alone they soared from 26,254 in 1825 to 43,555 in 1828. In 1822 about 30 percent, or 1 million, of Brazil's population were African-born or -descended slaves. Slavery was so pervasive that beggars had slaves, and naval volunteers took theirs aboard ship.

Pedro had written that slavery was a "cancer that is gnawing away at Brazil" and that no one had the right to enslave another. He wanted to abolish slavery, but his own liberal constitution gave the law-making authority to the slavocrat-controlled Parliament. In Brazil liberal principles and political formulas were given special meaning. The language of social contract, popular sovereignty, supremacy of law, universal rights, division of powers, and representative government was stripped of its revolutionary content and applied only to a select, privileged minority.

After 1826 the slavocrat agenda was to control the court system; to provide harsh punishments for slave rebellion but mild ones for white revolt; to reduce the armed forces, cleansing them of foreigners unsympathetic to slavery; to keep tariffs low and eliminate the Bank of Brazil in order to deny the central government the ability to stimulate a rival, finance-based industrial capitalism; and to shape immigration policy in such a way as to encourage servile labor instead of independent farmers or craftsmen. Led by Bernardo Pereira de Vasconcelos of Minas Gerais in the assembly, slavocrats argued that slavery was not demoralizing, that foreign capital and technology would not help Brazil, and that railroads would only rust. Others, such as Nicolau de Campos Vergueiro of São Paulo, argued in favor of replacing slavery with free European immigrants. In the end, the Parliament established a contract system that was little better than slavery. There would be no liberal empire. Laws and decrees unacceptable to the slavocrats simply would not take effect, such as the order in 1829 forbidding slave ships to sail for Africa. These items of the slavocrat agenda were the roots of the regional rebellions of the nineteenth century.

After Dom João's death in 1826, despite Pedro's renunciation of his right to the Portuguese throne in favor of his daughter, Brazilian nativist radicals falsely accused the emperor of plotting to overthrow the constitution and to proclaim himself the ruler of a reunited Brazil and Portugal. They raised tensions by provoking street violence against the Portuguese of Rio de Janeiro and agitated for a federalist monarchy that would give the provinces self-government and administrative autonomy. Brazil's fate was in the hands of a few people concentrated in the capital who spread false stories and undermined discipline in the army and police. It would not be the last time that events in Rio de Janeiro would shape the future. When Pedro dismissed his cabinet in April 1831, street and military demonstrators demanded its reinstatement in violation of his constitutional prerogatives. He refused, saying: "I will do anything for the people but nothing [forced] by the people." With military units assembled on the Campo Santana, an assembly ground in Rio de Janeiro, and people in the streets shouting "death to the tyrant," he backed down. Failing to form a new cabinet, he abdicated in favor of his five-year-old son Pedro II, boarded a British warship, and left Brazil as he had arrived, under the Union Jack.

Brazil - The Regency Era, 1831-40

The three regents that ruled in the young emperor's name from 1831 to 1840 witnessed a period of turmoil as local factions struggled to gain control of their provinces and to keep the masses in line. Out of desperation to weaken the radical appeals for federalism, republicanism, and hostility toward the Portuguese, and to protect against contrary calls for Pedro I's restoration, the regency in Rio de Janeiro gave considerable power to the provinces in 1834. Brazil took on the appearance of a federation of local pátrias (autonomous centers of regional power) with loose allegiance to the Rio de Janeiro government, whose function was to defend them from external attack and to maintain order and balance among them. The government's ability to carry out that function was impaired, however, by the low budgets allowed the army and navy, and by the creation of a National Guard, whose officers were local notables determined to protect their private and regional interests. The rebellions, riots, and popular movements that marked the next years did not spring as much from economic misery as from attempts to share in the prosperity stemming from North Atlantic demand for Brazil's exports.

Many of the disturbances were so fleeting they were all but forgotten. For example, in Rio de Janeiro alone there were five uprisings in 1831 and 1832. Another eight of the more famous revolts in the 1834-49 period included the participation of lower-class people, Indians, free and runaway blacks, and slaves, which accounts for their often fierce suppression. Republican objectives were apparent in some of these revolts, such as the War of the Farrapos (ragamuffins), also known as the Farroupilha Rebellion (1835-45), in Santa Catarina and Rio Grande do Sul. Others, such as the Cabanagem in Pará in 1835-37, the Sabinada in Salvador in 1837-38, the Balaiada Rebellion in Maranhao in 1838-41, and the ones in Minas Gerais and São Paulo in 1842, were propelled simultaneously by antiregency and promonarchial sentiments. Such unrest dispels the notion that the history of state formation in Brazil was peaceful. Instead, it shows the confrontation between the national government and the splintering pátrias , which would continue in varying degrees for the next century.

Pedro I's death from tuberculosis in 1834 had sapped the restorationist impulse and removed the glue that held uneasy political allies together. With the regency attempting to suppress simultaneous revolts in the South and North, it could not easily reassert its supremacy over the remaining provinces. Brazil could well have split apart in those years. It did not for three reasons. First, the military was reorganized as an instrument of national unity under the leadership of Luís Alves de Lima e Silva, who was ennobled as the Duke of Caxias (Duque de Caxias) and who would later be proclaimed Patron of the Brazilian Army. Second, the specter of slave revolt and social disintegration had become all too real. And third, the "vision of Brazil as a union of autonomous pátrias ," in Roderick J. Barman's phrase, was replaced by the vision of Brazil as a nation-state. Rather than risk their fortunes and lives, the elites, longing for a focus of loyalty, identity, and authority, rallied around the boy-emperor, who ascended the throne on July 18, 1841, at age fifteen instead of the constitutionally specified age of eighteen. Thus, the second empire was born in the hope that it would be an instrument of national unity, peace, and prosperity.

Brazil - The Second Empire, 1840-89

In the 1840s, the Brazilian nation-state coalesced as authorities suppressed revolts and rewrote Brazilian law. These laws, however, did not bode well for democracy because they shaped an electoral system based on government-controlled fraud. In 1842, on the advice of conservative courtiers, Pedro II used his constitutional moderating power to dismiss the newly elected liberal Chamber of Deputies and called new elections, which the conservatives won by stuffing the ballot boxes. In so doing, he set a pattern of favoring conservatives over liberals.

The constitution of 1824 had created the usual three governmental powers--executive, legislative, and judicial--and a fourth, the moderating power. The emperor held this power, which gave him the right to name senators, to dismiss the legislature, and to shift control of the government from one party to the other. In theory, he was to act as the political balance wheel. It should be noted that the parties were more groupings of members of Parliament than ideologically based movements dependent on distinct electorates. Historian Richard Graham observed that "No particular political philosophy distinguished one group from another." Then, as now, the political system had an artificial aspect to it; it did not relate openly to the real power structure of the country--the "lords of the land" (senhores da terra ) who ran local affairs.

A good example of how the real power holders manipulated the system to protect their narrow interests to the detriment of the national interest was the Land Law of 1850, which set the pattern for modern landholding. The Land Law ended the colonial practice of obtaining land through squatting or royal grants and limited acquisition to purchase, thereby restricting the number of people who could become owners. By creating obstacles to landownership, the law's framers hoped to force free labor to work for existing landlords. However, proprietors sabotaged the law by not surveying their lands and not resolving their conflicting claims in order to keep titles cloudy and hence in their hands. One result of the uncertain titles was that slaves were used as collateral.

Also in 1850, British pressure finally forced the Brazilian government to outlaw the African slave trade. London, tiring of Brazilian subterfuge, authorized its navy to seize slave ships in Brazilian waters, even in ports. Rather than risk open war with Britain, paralyzation of commerce, widespread slave unrest, and destabilization of the empire, the government outlawed the African slave trade. It deported a number of Portuguese slavers and instructed the provincial presidents, police, judges, and military to crack down. Over the next five years, even clandestine landings stopped, and despite the tempting rise of slave prices in the coffee districts of Rio de Janeiro Province, the trans-Atlantic trade ended. Although the British claimed credit, it should be noted that for the first time a Brazilian government had the power to enforce a law along the length of the coast. Also, internal support for the trade had weakened. Most slave importers were Portuguese, who had been selling the ever more expensive Africans to landowners on credit at climbing interest rates, in some cases forcing the latter into insolvency and loss of property. Xenophobia and the debts of the landed classes combined to support the government action.

Ending the slave trade had a number of consequences. First, because labor needs increased in Rio de Janeiro and São Paulo as the world demand for coffee rose, Northeastern planters sold their surplus slaves to Southern growers. In addition, Parliament passed laws encouraging European immigration, as well as the Land Law of 1850. Second, ending the slave trade freed capital that could then be used for investment in transport and industrial enterprises. Third, it ensured that Britain did not interfere in Brazil's military intervention to end the rule in Buenos Aires of Juan Manuel de Rosas (president of Argentina, 1829-33, 1835-52).

Coffee dominated exports in the last half of the nineteenth century, going from 50 percent of exports in 1841-50 to 59.5 percent in 1871-80. But sugar exports also increased, and cotton, tobacco, cocoa, rubber, and maté were important. The vast cattle herds that grazed the Northeastern sertão , the plains (cerrado ) of Minas Gerais, and the pampas of Rio Grande do Sul foreshadowed Brazil's status in 1990 as the world's second largest meat exporter. Meat-salting plants (saladeros ) in Rio Grande do Sul shipped sun-dried beef to the expanding coffee-growing region to feed its slaves and freed tenant farmers (colonos ). In addition to beef, Brazilians ate protein-rich beans, rice, and corn, much of which came from Minas Gerais or the immigrant colonies of Rio Grande do Sul. Interregional trade was budding, but for the most part local self-sufficiency was the norm. Indeed, more people produced food for the domestic market than labored on export crops.

Expanding coffee production in the 1850s and 1860s attracted British investment in railroads to speed transport of the beans to the coast. The Santos-São Paulo Railroad (1868) was the first major breach of the coastal escarpment, which had slowed development of the Southern plateau. Similarly, in the Northeast railroads began to cut into the interior from the coast. But generally the pattern was to connect a port with its export-oriented hinterland, creating a series of enclaves that were connected with each other by sea. Well into the twentieth century, Brazil lacked railroads and highways linking its major regions, urban areas, and economic zones. The country was laced together by intricate networks of mule trails that moved goods and people throughout the vast interior. Viewed as archaic by modern observers, the mule train trails nonetheless were important in Brazil's formation, tying the various regions together and spreading a common language and culture.

The empire had lost the East Bank of the Río de la Plata with the founding of Uruguay in 1828, but it continued to meddle in that republic's affairs. Brazil's most important businessman, Irineu Evangelista de Sousa, the Visconde de Mauá, had such heavy financial interests there that his company was effectively the Uruguayan government's bank. Other Brazilians owned about 400 large estates (estancias ) that took up nearly a third of the country's territory. They objected to the taxes the Uruguayans imposed when they drove their cattle back and forth to Rio Grande do Sul, and they took sides in the constant fighting between Uruguay's Colorado and Blanco political factions, which later became the Colorado Party and the National Party (Blancos). Some of Rio Grande do Sul's gauchos did not accept Uruguayan independence in 1828 and continually sought intervention.

In the mid-1860s, the imperial government conspired with Buenos Aires authorities to replace the Blanco regime in Montevideo with a Colorado one. The Blancos appealed to Paraguayan dictator Francisco Solano López (president, 1862-70), who harbored his own fears of the two larger countries and who regarded a threat to Uruguay as a menace to Paraguay. A small landlocked country, Paraguay had the largest army in the region: 64,000 soldiers compared with Brazil's standing army of 18,000. In 1864 Brazil and Argentina agreed to act together should Solano López attempt to save the Blancos. In September 1864, wrongly convinced that he would not be so foolish, the Brazilians sent troops into Uruguay to put the Colorados in power. Each side miscalculated the intentions, capabilities, and will of the other. Paraguay reacted by seizing Brazilian vessels on the Rio Paraguai and by attacking the province of Mato Grosso. Solano López, mistakenly expecting help from anti-Buenos Aires caudillos, sent his forces into Corrientes to get at Rio Grande do Sul and Uruguay and found himself at war with both Argentina and Brazil. In May 1865, those two countries and Colorado-led Uruguay signed an alliance that aimed to transfer contested Paraguayan territory to the larger countries, to open Paraguayan rivers to international trade, and to remove Solano López. By September 1865, the allies had driven the Paraguayans out of Rio Grande do Sul, and they took the war into Paraguay when that country spurned their peace overtures.

Fiercely defending their homeland, the Guaraní-speaking Paraguayans defeated the allies at Curupaití in September 1866. The Argentine president, General Bartolomé Mitre (1861-68), took the bulk of his troops home to quell opposition to his war policy, leaving the Brazilians to soldier on. The famed General Lima e Silva, Marquis and later Duke of Caxias, took command of the allied forces and led them until the fall of Asunción in early 1869. With stubborn determination, the Brazilians pursued Solano López until they cornered and killed him. They then occupied Paraguay until 1878.

The war dragged on for several reasons. First, the Paraguayans were better prepared at the outset and conducted an effective offensive into the territories of their adversaries, immediately handing them defeats. Even later, when pushed back onto their own land, they had the advantages of knowing the ground, of having prepared defenses, and of fielding stubbornly loyal troops. Second, it took the Brazilians considerable time to marshal their forces and considerable effort and cost to keep them supplied. Third, the Argentines, hoping to improve their postwar situation in relation to Brazil, delayed operations partly to force the empire to weaken itself by expending its resources. Fourth, this was the era of "unconditional surrender." It was militarily fashionable to pursue Solano López to the bitter end.

The war had important consequences for Brazil and the Río de la Plata region. It left Brazil and Argentina facing each other over a prostrate Paraguay and a dependent Uruguay, a situation that would soon turn into a tense rivalry that repeatedly assumed warlike postures. Historians debate the number of Paraguayan casualties, some asserting that 50 percent of Paraguayans were killed, others arguing that it was much less, possibly 8 to 9 percent of the prewar population total. Nonetheless, the losses from battle, disease, and starvation were severe and disrupted the development of the republic. In Brazil the war contributed to the growth of manufacturing, to the professionalization of the armed forces and their concentration in Rio Grande do Sul, to the building of roads and the settling of European immigrants in the southern provinces, and to the increased power of the central government. Most important for the future, the war brought the military firmly into the political arena. Military officers were keenly aware that the war had exposed the military's lack of equipment, training, and organization. Officers blamed these shortcomings on civilian officials. In the next decades, reformist officers seeking to modernize the army would criticize the Brazilian political structure and its peculiar culture as obstacles to modernization.

The end of the war coincided with the resurgence of republicanism as disenchanted liberals cast about for a new route to power. The 1867 collapse of the short-lived, French-sponsored Mexican monarchy of Maximilian left Brazil as the hemisphere's only monarchial regime. And because Argentina appeared to prosper in the 1870s and 1880s, it served as a powerful advertisement for republican government. The republican ideology spread in urban areas and in provinces, such as São Paulo and Rio Grande do Sul, where the people did not believe they benefited from imperial economic policies. The republican manifesto of 1870 proclaimed that "We are in America and we want to be Americans." Monarchy was, the writers asserted, hostile to the interests of the American states and would be a continuous source of conflict with Brazil's neighbors. The republicans embraced the abolition of slavery to remove the stigma of Brazil's being the only remaining slaveholding country (save for Spanish Cuba) in the hemisphere. It was not so much that they believed that slavery was wrong as that it gave the country an image distasteful to Europeans. Abolition, which would come in 1888, did not imply that liberals wanted deep social reform or desired a democratic society. Indeed, their arguments against slavery were weighted toward efficiency rather than morality. Once in power, the republicans looked to discipline the legally free work force with various systems of social control.

The Brazilian social system functioned through intertwined networks of patronage, familial relationships, and friendships. The state, capitalist economy, and institutions such as the church and the army developed within what historian Emília Viotti da Costa has called, "the web of patronage." Contacts and favor rather than ability determined success in virtually all occupations. Brazilian society was, and still is, one in which a person could not advance without friends and family; hence, the continued importance of kinship networks (parentelas ), godfathers (compadres ) and godmothers (comadres ), and military school classes (turmas ). Such a social system did not lend itself to reform.

The 1870s and 1880s saw a crisis in each of the three pillars of the imperial regime--the church, the military, and the slaveholding system. Together, these crises represented the failure of the regime to adapt without alienating its base. In the 1870s, Rome pressured Brazil's Roman Catholic Church to conform to the conservative reforms of Vatican Council I, which strengthened the power of the pontiff by declaring him infallible in matters of faith and morals. This effort by Rome to unify doctrine and practice worldwide conflicted with royal control of the church in Brazil. The crown had inherited the padroado , or right of ecclesiastical patronage, from its Portuguese predecessor. This right gave the crown control over the church, which imperial authorities treated as an arm of the state. Although some clerics had displayed republican sentiments earlier in the century, a church-state crisis exploded in the mid-1870s over efforts to Europeanize the church.

The importance of the military crisis is clearer because it removed the armed prop of the regime. After the Paraguayan War (1864-70), the monarchy was indifferent to the army, which the civilian elite did not perceive as a threat. The fiscal problems of the 1870s slowed promotions to a crawl, salaries were frozen, and officers complained about having to contribute to a widows' fund from their meager salaries. Moreover, the soldiers in the ranks were considered the dregs of society, discipline was based on the lash, and training seemed pointless. The gulf between the military and the civilian oligarchies broadened. The political parties were as indifferent as the government to demands for military reform, for obligatory military service, for better armament, and for higher pay and status. During the 1870s, the discontent was checked by the National Guard's reduced role; by an unsuccessful but welcomed attempt to improve the recruitment system; and, especially, by the cabinet service of war heroes, including the Duke of Caxias as prime minister (1875-78) and Marshal Manuel Luís Osório, the Marquis of Herval, as minister of war (1878). But the latter died in 1879 and Caxias the year after, leaving leadership to officers less committed to the throne. The junior officer ranks were filled with men from the middle sectors who had entered the army to obtain an education rather than to follow a military career. They were more concerned than their predecessors with social changes that would open opportunities to the lower middle class.

The officer corps was split into three generations. The oldest group had helped suppress the regional revolts of the 1830s and 1840s, had fought in Argentina in 1852, and had survived the Paraguayan War. The numerous mid-level officers were better schooled than their seniors and had been tested in combat in Paraguay. The junior officers had missed the war but had the most education of the three groups and had experienced the empire only when its defects had become clearly apparent. They were the least attached to the old regime and the most frustrated by the lack of advancement in a peacetime army cluttered with veterans of the great war.

Brazilian political tradition permitted officers to hold political office and to serve as cabinet ministers, thereby blurring the civil-military roles. As parliamentary deputies and senators, officers could criticize the government, including their military superiors, with impunity. In the 1880s, officers participated in provincial politics, debated in the press, and spoke in public forums. In 1884 a civilian minister of war attempted to impose order by forbidding officers to write or speak publicly about governmental matters. The subsequent punishments of offending officers led Field Marshal Manuel Deodoro da Fonseca and General José Antônio Correia de Câmara (Visconde de Pelotas) to head protests that eventually forced the minister to resign in February 1887 and the cabinet to fall in March 1888.

Even as the church and military crises were unfolding, the slavery issue shook the support of the landed elite. Members of the Liberal and Conservative Parties came from the same social groups: plantation owners (fazendeiros ) made up half of both, and the rest were bureaucrats and professionals. The ideological differences between the parties were trivial, but factional and personal rivalries within them made it difficult for the parties to adjust to changing social and economic circumstances. As a result, the last decade of the empire was marked by considerable political instability. Between 1880 and 1889, there were ten cabinets (seven in the first five years) and three parliamentary elections, with no Parliament able to complete its term. The repeated use of the moderating power provoked alienation, even among traditional monarchists.

Attitudes toward slavery had shifted gradually. Pedro II favored abolition, and during the Paraguayan War slaves serving in the military were emancipated. In 1871 the Rio Branco cabinet approved a law freeing newborns and requiring masters to care for them until age eight, at which time they would either be turned over to the government for compensation or the owner would have use of their labor until age twenty-one. In 1884 a law freed slaves over sixty years of age. By the 1880s, the geography of slavery had also changed, and the economy was less dependent on it. Because of manumissions (many on condition of remaining on the plantations) and the massive flight of slaves, the overall numbers declined from 1,240,806 in 1884 to 723,419 in 1887, with most slaves having shifted from the sugar plantations in the Northeast to the south-central coffee groves. But even planters in São Paulo, where the slave percentage of the total population had fallen from 28.2 percent in 1854 to 8.7 percent in 1886, understood that to continue expansion they needed a different labor system. The provincial government therefore actively began subsidizing and recruiting immigrants. Between 1875 and 1887, about 156,000 arrived in São Paulo. Meanwhile, the demand for cheap sugarcane workers in the Northeast was satisfied by sertanejos (inhabitants of the sertão ) fleeing the devastating droughts of the 1870s in the sertão .

The economic picture was also changing. Slavery immobilized capital invested in the purchase and maintenance of slaves. By turning to free labor, planter capital was freed for investment in railroads, streetcar lines, and shipping and manufacturing enterprises. To some extent, these investments offered a degree of protection from the caprices of agriculture.

Meanwhile, slaves left the plantations in great numbers, and an active underground supported runaways. Army officers petitioned the Regent Princess Isabel to relieve them of the duty of pursuing runaway slaves. Field Marshal Deodoro da Fonseca, commander in Rio Grande do Sul, declared in early 1887 that the military "had the obligation to be abolitionist." The São Paulo assembly petitioned the Parliament for immediate abolition. The agitation reached such a pitch that to foreign travelers, Brazil appeared on the verge of social revolution. The system was coming apart, and even planters realized that abolition was the way to prevent chaos.

The so-called Golden Law of May 13, 1888, which ended slavery, was not an act of great bravery but a recognition that slavery was no longer viable. The economy revived rapidly after a few lost harvests, and only a small number of planters went bankrupt. Slavery ended, but the plantation survived and so did the basic attitudes of a class society. The abolitionists quickly abandoned those they had struggled to free. Many former slaves stayed on the plantations in the same quarters, receiving paltry wages. They were joined by waves of immigrants, who often found conditions so unbearable that they soon moved to the cities or returned to Europe. No freedmen's bureaus or schools were established to improve the lives of the former slaves; they were left at the bottom of the socioeconomic scale, where their descendants remain in the 1990s. New prisons built after 1888 were soon filled with former slaves as society imposed other forms of social control, in part by redefining crime.

In the end, the empire fell because the elites did not need it to protect their interests. Indeed, imperial centralization ran counter to their desires for local autonomy. The republicans embraced federalism, which some saw as a way to counter the oligarchies, which used patronage and clientage to stay in power. In the early republic, however, they would find that the oligarchies adapted easily and used their accumulated power and skills to control the new governmental system. Taking advantage of cabinet crises in 1888 and 1889 and of rising frustration among military officers, republicans favoring change by revolution rather than by evolution drew military officers, led by Field Marshal Fonseca, into a conspiracy to replace the cabinet in November 1889. What started as an armed demonstration demanding replacement of a cabinet turned within hours into a coup d'état deposing Emperor Pedro II.

Brazil - The Republican Era, 1889-1985

The history of the republic has been a search for a viable form of government to replace the monarchy. That search has lurched back and forth between state autonomy and centralization. The constitution of 1891, establishing the United States of Brazil (Estados Unidos do Brasil), restored autonomy to the provinces, now called states. It recognized that the central government did not rule at the local level, that it exercised control only through the local oligarchies. The empire had not absorbed fully the regional pátrias , and now they reasserted themselves. Into the 1920s, the federal government in Rio de Janeiro would be dominated and managed by a combination of the more powerful pátrias (São Paulo, Minas Gerais, Rio Grande do Sul, and to a lesser extent Pernambuco and Bahia). After the revolution of 1930, the trend would be strongly toward absorption of the pátrias , reaching a peak in the New State (Estado Novo) of 1937-45. Centralization extended into the smallest remote villages as the nation-state's bureaucracy and power grew to previously unknown levels. Renewed autonomy would come with the constitution of 1946 but would disappear under the military regime. The constitution of 1988 once again restored a degree of state autonomy but in the context of a powerful, all-embracing nation-state. In the 1990s, the pátrias are more folkloric vestiges than autonomous centers of power.

The history of the republic is also the story of the development of the army as a national institution. The elimination of the monarchy had reduced the number of national institutions to one, the army. Although the Roman Catholic Church continued its presence throughout the country, it was not national but rather international in its personnel, doctrine, liturgy, and purposes. By the time of the 1964 coup, the political parties were not national parties; they were oriented more along regional, personalist (personalism--see Glossary), and special-interest lines. Only in the struggle to reestablish civilian rule in the 1980s did a fitful process of creating national parties take shape. Thus, the army was the core of the developing Brazilian state, a marked change from the marginal role that it had played during the empire. The army assumed this new position almost haphazardly, filling part of the vacuum left by the collapse of the monarchy and gradually acquiring a doctrine and vision to support its de facto role. Although it had more units and men in Rio de Janeiro and Rio Grande do Sul than elsewhere, its presence was felt throughout the country. Its personnel, its interests, its ideology, and its commitments were national in scope (see The Military Role in Society and Government, ch. 5).

The republic's first decade was one of turmoil. It appears to be a pattern of Brazilian history that seemingly peaceful regime changes are followed by long periods of adjustment, often scarred by violence. Years of "regime change" in 1889, 1930, and 1964 introduced protracted adjustment that involved some authoritarian rule. Curiously, because the violence occurred over long periods, usually without overturning the government in Rio de Janeiro or Brasília, Brazil acquired an undeserved reputation for having a nonviolent history of political and social compromise.

Brazil - The Old or First Republic, 1889-1930

The founders of the Brazilian republic faced a serious question of legitimacy. How could an illegal, treasonous act establish a legal political order? The officers who joined Field Marshal Deodoro da Fonseca in ending the empire were violating solemn oaths to uphold emperor and empire. The officer corps would eventually resolve the contradiction by linking its duty and destiny to Brazil, the motherland, rather than to transitory governments. In addition, the republic was born rather accidentally: Deodoro had intended only to replace the cabinet, but the republicans manipulated him into fathering a republic.

The Brazilian republic was not a spiritual offspring of the republics born of the French or American revolutions, even though the Brazilian regime would attempt to associate itself with both. The republic did not have enough popular support to risk open elections. It was a regime born of a coup d'état that maintained itself by force. The republicans made Deodoro president (1889-91) and, after a financial crisis, appointed Field Marshal Floriano Vieira Peixoto minister of war to ensure the allegiance of the military. Indeed, the Brazilian people were bystanders to the events shaping their history. In the last decades of the nineteenth century, the United States, much of Europe, and neighboring Argentina expanded the right to vote. Brazil, however, moved to restrict access to the polls. In 1874, in a population of about 10 million, the franchise was held by about 1 million, but in 1881 this had been cut to 145,296. This reduction was one reason the empire's legitimacy foundered, but the republic did not move to correct the situation. By 1910 there were only 627,000 voters in a population of 22 million. Throughout the 1920s, only between 2.3 percent and 3.4 percent of the total population voted.

Just as the 1889 regime change led to a decade of unrest and painful adjustment, so too did the revolts of 1930. Provisional President Getúlio Dorneles Vargas ruled as dictator (1930-34), congressionally elected president (1934-37), and again dictator (1937-45), with the backing of his revolutionary coalition. He also served as a senator (1946-51) and the popularly elected president (1951-54). Vargas was a member of the gaucho-landed oligarchy and had risen through the system of patronage and clientelism, but he had a fresh vision of how Brazilian politics could be shaped to support national development. He understood that with the breakdown of direct relations between workers and owners in the expanding factories of Brazil, workers could become the basis for a new form of political power--populism. Using such insights, he would gradually establish such mastery over the Brazilian political world that he would stay in power for fifteen years. During those years, the preeminence of the agricultural elites ended, new urban industrial leaders acquired more influence nationally, and the middle class began to show some strength.

Tenentismo , or the lieutenants' rebellion against the army and governmental hierarchies, faded as a distinctive movement after 1931, in part because its adherents promoted the preservation of state autonomy when the trend toward increased centralization was strong. Individual lieutenants continued to exercise important roles, but they made their peace with the traditional political forces. In 1932 São Paulo, whose interests and pride suffered under the new regime, rose in revolt. The three-month civil war saw many officers who had lost out in 1930 or were otherwise disgruntled join the Paulistas, but federal forces defeated them.

A new constitution in 1934 reorganized the political system by creating a legislature with both state and social-sector representatives. It contained some electoral reforms, including women's suffrage, a secret ballot, and special courts to supervise elections. The Constituent Assembly elected Vargas president for a four-year term. However, the attempt to harness the revolution to the old system, somewhat remodeled, would soon fail completely and take Brazil into prolonged dictatorship. The left helped in that process by becoming a creditable threat. On misguided instructions from Moscow based on misinformation from Brazil, the Brazilian communists, led by a former tenente, staged a revolt in 1935, but it was rapidly suppressed.

In the 1930s, the civilian elites feared that Brazil would suffer a civil war similar to Spain's, and so for the first time in Brazilian history they supported a strong, unified military. The Estado Novo gave the army its long-held desire for control over the states' Military Police (Policia Militar) units. The elites of the old state pátrias gave up their independent military power in return for federal protection of their interests. This process was not always a willing one, as the Paulista revolt of 1932 showed, but federal monopoly of military force escalated the power of the central government to levels previously unknown. A significant turning point in the history of Brazil had been reached.

Under the Estado Novo, state autonomy ended, appointed federal officials replaced governors, and patronage flowed from the president downward. All political parties were dissolved until 1944, thus limiting opportunities for an opposition to organize. In the process, Vargas eliminated threats from the left and the right. At the local level, "colonels" survived by declaring their loyalty and accepting their share of patronage for distribution to their own underlings. The Vargas years had their greatest impact on national politics and economics and their least impact at the local level where the older forms of power continued well into the 1950s. Even in the 1990s, local political bosses were tagged "colonels." Vargas took care to absorb the rural and commercial elites into his power base. He had the ability to make former enemies supporters, or at least neutrals.

If corporatism was the hallmark of the 1930s and 1940s, populism, nationalism, and developmentalism characterized the 1950s and early 1960s. Each of these contributed to the crisis that gripped Brazil and resulted in the authoritarian regime after 1964. At the core of the crisis was the continued unwillingness of the elite to share the benefits of Brazil's wealth with the majority of the people. By the early 1960s, the crisis was boiling in reverse, from the top down. The crisis had much more to do with elite fears of a mass uprising, supposedly instigated by international communism, than with the reality of social revolution. They, rather than the masses, believed the fiery rhetoric of leftist-populist politicians. What elites elsewhere might have seen as popular democratic mobilization, the Brazilian elites saw as revolutionary change that threatened their well-being. Because they portrayed their well-being as the same as the national well-being, and because they controlled the state and the instruments of power, they responded with a counterrevolution, what historian Joseph Page labeled "the revolution that never was."

Labor became more active in seeking to improve the status of the working class, and the population continued to grow beyond the state's ability to expand educational and social services. As a result, conservative elites feared that they were losing control of politics and of the state. The elites had opposed Vargas because he sought to use the state to spread benefits more broadly. The middle classes tended to identify with elite visions of society and to see the lower classes as a threat. Curiously, the term povo (people), which had meant the lowest class, the destitute, the squatters, the rural poor, had changed by the early 1950s to mean the politically active and economically mobile urban lower classes. Further, politicians appealed to the povo during election campaigns but once elected directed government benefits principally to the middle and upper classes.

Juscelino Kubitschek (1956-61), the only post-Vargas elected president to serve a full term, soothed opponents by avoiding the emotional appeals of the populists. Even so, his common touch reached millions, and his developmentalist and nationalist visions stirred the Brazilian imagination. Kubitschek co-opted the military by involving it in the decision-making process and by adequately funding it. He pushed the creation of an automotive industry, which in a generation would result in Brazil's leaping from the bull cart and mule train era into that of the internal combustion engine. The new factories turned out 321,000 vehicles in 1960. The great highway network of the late twentieth century and the world's eighth-largest automobile production are his legacies. And he yanked Brazil away from its fascination with the coast by moving the capital to Brasília in a new Federal District (Distrito Federal) carved out of then-distant Goiás. Thanks to the changes in transportation and the growing availability of motorized farm equipment, the vast countryside of Goiás and Mato Grosso would be cultivated in the next decades, and Brazil would become the world's number-two food exporter. The overall economy would expand 8.3 percent a year. There was a lot of truth in his government's motto: "Fifty Years' Progress in Five."

Brazil of 1960 was very different from that of 1930. The population, which had been 33.5 million in 1930, was now 70 million, with 44 percent in urban areas. A third of all Latin Americans were Brazilian. Life expectancy had improved noticeably. The number of industrial workers had more than doubled from a 1940 level of 1.6 million to 2.9 million, and the industrial share of GDP was higher (25.2 percent) than that of agriculture (22.5 percent). The underside of such progress was a continuous swelling of urban slums and inflation. The annual rate of inflation rose from 12 percent in 1949 to 26 percent in 1959, and then zoomed to a shocking 39.5 percent in 1960. Savings depreciated, lenders refused to offer long-term loans, interest rates soared, and the government refused to undertake orthodox, anti-inflationary programs styled after those of the International Monetary Fund (IMF--see Glossary). Moreover, the disparities between rich and poor remained, with 40 percent of national income enjoyed by 10 percent of the population, 36 percent going to the next 30 percent, and 24 percent being divided among the poorest 60 percent of Brazilians. Before national wealth could be redistributed, however, development had to be maintained.

Brazil had the potential, but it lacked the hard currency necessary to pay for the imports needed to sustain swift industrialization. Either it could cut imports, thereby paralyzing factories and transportation, or it could stop repayments on foreign loans and profit remittances from foreign investments. With such unpalatable alternatives, it is not surprising that Brazilian governments had difficulty formulating an economic plan that would both satisfy creditors and keep trade flowing.

The populist administrations of Jânio Quadros (January-August 1961) and João Goulart (1961-64) expanded the term povo once again to embrace the rural poor, thereby producing the image of a budding proletariat ready to join a reformist government against elite privilege and United States imperialism. Quadros, a former governor of São Paulo, could not keep his promise to sweep out corruption, because his bid for more presidential power ended with his sudden resignation on August 25, 1961. He had assembled a makeshift political coalition that gave him an impressive electoral margin but did not give him enough influence in Congress to get his legislation passed.

Frustrated, he planned to restructure the government, but before he could act, Carlos Lacerda, governor of Guanabara (the old Rio de Janeiro Federal District), revealed that Quadros intended to close Congress, decree reforms, and get the people's blessing in a plebiscite. Quadros and Lacerda clashed over the issue of an independent foreign policy. Such a policy, which Quadros supported, emphasized new markets for Brazilian products and a strong stance in favor of the developing world, while maintaining relations with the United States but refusing to isolate Cuba. Lacerda was particularly critical of Quadros's pro-Cuba policy. Quadros resigned believing that the military would be unwilling to allow Vice President João Goulart, a populist and former minister of labor under Vargas, to assume the presidency. Quadros hoped that his action would shock the povo into taking to the streets to demand his reimposition and would spur the military into pressuring Congress. He then flew to São Paulo, where he spent the next day at a military base waiting for the summons to return, but instead the head of the Chamber of Deputies was sworn in as acting president. People were shocked, but they tended to feel betrayed by Quadros rather than believe that "terrible forces" had risen against him. On that Friday in August 1961, the republic of 1945 began its painful death.

Instead of worrying how to restore Quadros, the politicians and military leaders focused on Goulart's succession. An uneasy country awaited Goulart on his return from a trade mission to China. Congress refused to agree to the request of the military ministers that it disavow his right to the presidency. His brother-in-law, Leonel de Moura Brizola, the fiery governor of Rio Grande do Sul, and the regional army commander announced that their forces would defend the constitution. The threat of civil war was ominous. Instead, a compromise changed the constitutional system from a presidential to a parliamentary one (1961-63), with Goulart as president and Tancredo de Almeida Neves of Minas Gerais as prime minister. In the next months, Goulart, chafing at the attempt to turn him into a figurehead, made heated appeals to the masses to mobilize in his favor. Goulart secured victory in a 1962 plebiscite, which restored the presidential system in January 1963. Unhappily, Goulart interpreted the five-to-one margin as a personal mandate, as opposed to a mandate for the presidential system.

Goulart's relations with the United States went from uneasy, when he visited President John F. Kennedy and gave a speech to the United States Congress in April 1963, to frigid, when President Lyndon B. Johnson took over in Washington in November 1963. The United States, smarting from Fidel Castro's radicalization of Cuba, resented Brazilian unwillingness to isolate Havana and became obsessed with peasants organizing in the impoverished Northeast. Washington poured millions of dollars directly into that region's states, bypassing Goulart's government. The regional elites happily accepted United States aid to expand their autonomy vis-à-vis Brasília.

Goulart carried his populism too far when he backed proposals for noncommissioned officers to hold political office and when he appeared sympathetic to rebelling sergeants in September 1963. The officer corps believed that the president was undermining discipline, thereby threatening military institutions.

Minister of Army General Amaury Kruel complained that the army had been subjected to a "survival" budget since 1958 and that most of its armaments and equipment were either obsolete, beyond repair, or required replacement. In 1962 every regional army headquarters reported that it was not in condition to hold regular exercises, and many officers concluded that their efforts were useless because of a generalized "disbelief and lack of incentive." General Kruel alerted President Goulart that inadequate funding was creating a "calamitous situation" in which the army was being "economically and financially asphyxiated."

The right and the military charged that Goulart's call for reforming legislation was merely a cover for a radical nationalist takeover. Publicly, they organized study groups, formed a shadow government, orchestrated an intense press campaign, and staged street marches. Secretly, they armed large landowners (fazendeiros ) in the countryside, developed plans to neutralize opposition and to topple the government, and sought help from the United States. The military was again about to break the bonds of obedience to a national government. The argument was that the armed forces should support any government as long as it was democratic.

Such logic grew more persuasive as political mobilization gripped the society. Peasant land seizures and urban food riots contributed to a sense of impending chaos. Brizola bragged foolishly that he had a 200,000-strong peoples' militia organized in groups of eleven. The opposition charged the government with arousing a "state of revolutionary war." In the months before March 1964, the staff and student officers of the Army General Staff School (Escola de Comando de Estado-Maior do Exército--ECEME) played a key role in convincing officers that they should support a move against Goulart. Even the highly respected chief of staff, Marshal Humberto de Alencar Castelo Branco, joined the conspiracy. Castelo Branco had served as FEB operations officer in Italy, director of studies at ECEME, and long-time head of the War College. The officers believed that rational economic development, internal security, and institutional well-being would occur only if economic and political structures were altered, and that the civilian leaders were unwilling to make the necessary changes. They believed that the left was so well-organized that the conspiracy might fail. They had plans to flee Brazil in that case, and United States officers had promised that they would receive training and logistical support to return to wage a guerrilla war.

Struggling to keep the impatient left on his side and to stave off the right, Goulart opted for a series of public rallies to mobilize pressure for basic reforms. In a huge rally in Rio de Janeiro on March 13, 1964, Goulart decreed agrarian reform and rent controls and promised more. A counter rally against the government, held six days later in São Paulo, put 500,000 people marching in the streets. Sailors and marines in Rio de Janeiro, led by an agent provocateur of the anti-Goulart conspiracy, mutinied in support of Goulart. However, Goulart mishandled the incident by agreeing that they would not be punished and that the navy minister would be changed. The uproar was immediate. Rio de Janeiro's Correio da Manhã published an unusual Easter Sunday edition with the headline "Enough!" It was followed the next day, March 30, with one saying "Out!" In the next two days, the military moved to secure the country, and Goulart fled to Uruguay. Brizola's resistance groups proved an illusion, as did the supposed arms caches of the unions and the readiness of favela residents to attack the wealthy. The period of the military republic had begun.

Brazil - The Military Republic, 1964-85

The military held power from 1964 until March 1985 not by design but because of political struggles within the new regime. Just as the regime changes of 1889, 1930, and 1945 unleashed competing political forces and caused splits in the military, so too did the regime change of 1964. Because no civilian politician was acceptable to all the revolutionary factions, the army chief of staff, Marshal Humberto Castelo Branco (president, 1964-67), became president with the intention of overseeing a reform of the political-economic system. He refused to stay beyond the term of deposed João Goulart or to institutionalize the military in power. However, competing demands radicalized the situation; military hard-liners wanted a complete purge of left-wing and populist influences, while civilian politicians obstructed Castelo Branco's reforms. The latter accused him of dictatorial methods, and the former criticized him for not going far enough. To satisfy the military hard-liners, he recessed and purged Congress, removed objectionable state governors, and decreed expansion of the president's (and thereby the military's) arbitrary powers at the expense of the legislature and judiciary. His gamble succeeded in curbing the populist left but provided the successor governments of Marshal Artur da Costa e Silva (1967-69) and General Emílio Garrastazú Médici (1969-74) with a basis for authoritarian rule. Anti-Goulart politicians understood too late the forces they had helped unleash.

Castelo Branco tried to maintain a degree of democracy. His economic reforms prepared the way for the Brazilian economic "miracle" of the next decade, and his restructuring of the party system that had existed since 1945 shaped the contours of government-opposition relations for the next two decades. He preserved presidential supremacy over the military and kept potential coup-makers in check, but in the process he had to expand presidential powers in the infamous Second Institutional Act of October 1965, and he had to accept the succession of Minister of Army Costa e Silva.

As in earlier regime changes, the armed forces' officer corps was divided between those who believed that they should confine themselves to their professional duties and the hard-liners who regarded politicians as scoundrels ready to betray Brazil to communism or some other menace. The victory of the hard-liners dragged Brazil into what political scientist Juan J. Linz called "an authoritarian situation." However, because the hard-liners could not ignore the counterweight opinions of their colleagues or the resistance of society, they were unable to institutionalize their agenda politically. In addition, they did not attempt to eliminate the trappings of liberal constitutionalism because they feared disapproval of international opinion and damage to the alliance with the United States. As the citadel of anticommunism, the United States provided the ideology that the authoritarians used to justify their hold on power. But Washington also preached liberal democracy, which forced the authoritarians to assume the contradictory position of defending democracy by destroying it. Their concern for appearances caused them to abstain from personalist dictatorship by requiring each successive general-president to pass power to his replacement.

The role of the United States in these events was complex and at times contradictory. An anti-Goulart press campaign was conducted throughout 1963, and in 1964 the Johnson administration gave moral support to the campaign. Ambassador Lincoln Gordon later admitted that the embassy had given money to anti-Goulart candidates in the 1962 municipal elections and had encouraged the plotters; that many extra United States military and intelligence personnel were operating in Brazil; and that four United States Navy oil tankers and the carrier Forrestal , in an operation code-named Brother Sam, had stood off the coast in case of need during the 1964 coup. Washington immediately recognized the new government in 1964 and joined the chorus chanting that the coup d'état of the "democratic forces" had staved off the hand of international communism. In retrospect, it appears that the only foreign hand involved was Washington's, although the United States was not the principal actor in these events. Indeed, the hard-liners in the Brazilian military pressured Costa e Silva into promulgating the Fifth Institutional Act on December 13, 1968. This act gave the president dictatorial powers, dissolved Congress and state legislatures, suspended the constitution, and imposed censorship.

In October 1969, when President Costa e Silva died unexpectedly, the democratic mask fell off as the officer corps of the three services consulted among themselves to pick General Garrastazú Médici for the presidency. Costa e Silva and Médici represented the hard-line, antipolitics segment of the military, which seemingly was content to hold authority as long as necessary to turn Brazil into a great power. The Médici government illustrated how it was possible to remain in power without popular support, without a political party, and without a well-defined program. It was the era of terrorist actions in the cities, replete with kidnappings of diplomats, including the United States ambassador, and an extensive antiguerrilla campaign in northern Goiás. The repressive apparatus expanded into various agencies, which spied on political opponents and engaged in dirty tricks, torture, and "disappearings" (see The Military Role in the Intelligence Services, ch. 5). Those operations caused an open break between the government and the hierarchy of the Roman Catholic Church for the first time in Brazilian history. They also produced a deterioration in relations with the United States, whose leaders had expected the Castelo Branco vision of the revolution to win out.

The Médici administration wrapped itself in the green and gold flag when Brazil won the World Cup in soccer in 1970, began to build the Trans-Amazonian Highway through the northern rain forests, and dammed the Rio Paraná, creating the world's largest hydroelectric dam at Itaipu. From 1968 to 1974, parallel with the darkest days of the dictatorship, the military-civil technocratic alliance took shape as the economy boomed, reaching annual GDP growth rates of 12 percent. It looked as if Brazil's dreams of full industrialization and great-power status were possible. Sadly, in those years of the supposed "economic miracles," criticism and labor unrest were suppressed with arrests, torture, and censorship. Moreover, this apparent success of mixing authoritarian rule and economic growth encouraged officers in Argentina, Chile, Bolivia, and Uruguay to seize power in their countries.

It was in this atmosphere that retired General Ernesto Geisel (1974-79) came to the presidency with Médici's approval. There had been intense behind-the-scenes maneuvering by the hard-liners against him and by the more moderate supporters of Castelo Branco for him. Fortunately for Geisel, his brother, Orlando Geisel, was the minister of army, and his close ally, General João Baptista de Oliveira Figueiredo, was chief of Médici's military staff.

Although not immediately understood by civilians, Ernesto Geisel's accession signaled a move away from repression toward democratic rule. Geisel replaced several regional commanders with trusted officers and labeled his political program distensão , meaning a gradual relaxation of authoritarian rule. It would be, in his words, "the maximum of development possible with the minimum of indispensable security."

President Geisel sought to maintain high economic growth rates, even while seeking to deal with the effects of the oil shocks. He kept up massive investments in infrastructure--highways, telecommunications, hydroelectric dams, mineral extraction, factories, and atomic energy. Fending off nationalist objections, he opened Brazil to oil prospecting by foreign firms for the first time since the early 1950s. His government borrowed billions of dollars to see Brazil through the oil crisis.

Brazil shifted its foreign policy to meet its economic needs. "Responsible pragmatism" replaced strict alignment with the United States and a worldview based on ideological frontiers and blocs of nations. Because Brazil was 80 percent dependent on imported oil, Geisel shifted the country from a pro-Israeli stance to closer ties with oil-rich Saudi Arabia and Iraq. His government also recognized China, Angola, and Mozambique and moved closer to Spanish America, Europe, and Japan. The 1975 agreement with the Federal Republic of Germany (West Germany) to build nuclear reactors produced confrontation with the Carter administration, which was also scolding the Geisel government for the human rights abuses that it was fighting to stop. Frustrated with what he saw as United States highhandedness and lack of understanding, Geisel renounced the military alliance with the United States in April 1977.

In 1977 and 1978, the succession issue caused further confrontations with the hard-liners. Noting that Brazil was only a "relative democracy," Geisel attempted in April 1977 to restrain the growing strength of the opposition parties by creating an electoral college that would approve his selected replacement. In October he dismissed the far-right minister of army, General Sylvio Cueto Coelho da Frota. In 1978 Geisel maneuvered through the first labor strikes since 1964 and through the repeated electoral victories of the opposition Brazilian Democratic Movement (Movimento Democrático Brasileiro--MDB). He allowed the return of exiles, restored habeas corpus, repealed the extraordinary powers decreed by the Fifth Institutional Act, and imposed General João Figueiredo (1979-85) as his successor in March 1979.

The last military president, João Figueiredo, said that he took over the presidency more out of a sense of duty than political ambition. He signed a general amnesty into law and turned Geisel's distensão into a gradual abertura (the opening of the political system), saying that his goal was "to make this country a democracy." The hard-liners reacted to the opening with a series of terrorist bombings. An April 1981 bombing incident confirmed direct military involvement in terrorism, but Figueiredo proved too weak to punish the guilty. The incident and the regime's inaction strengthened the public's resolve to end military rule. Moreover, Figueiredo faced other significant problems, such as soaring inflation, declining productivity, and a mounting foreign debt.

Political liberalization and the declining world economy contributed to Brazil's economic and social problems. In 1978 and 1980, huge strikes took place in the industrial ring around São Paulo. Protesters asserted that wage increases indexed to the inflation rate were far below a livable level. Union leaders, including the future 1990 presidential candidate Luis "Lula" Inácio da Silva, were arrested for violation of national security laws. The IMF imposed a painful austerity program on Brazil. Under that program, Brazil was required to hold down wages to fight inflation. In the North, Northeast, and even in relatively prosperous Rio Grande do Sul, rural people seized unused, private land, forcing the government to create a new land reform ministry. Tension with the Roman Catholic Church, the major voice for societal change, peaked in the early 1980s with the expulsion of foreign priests involved in political and land reform issues.

To attack the soaring debt, Figueiredo's administration stressed exports--food, natural resources, automobiles, arms, clothing, shoes, even electricity--and expanded petroleum exploration by foreign companies. In foreign relations, the objective was to establish ties with any country that would contribute to Brazilian economic development. Washington was kept at a certain distance, and the North-South dialogue was emphasized.

In 1983 the economy leaped ahead with 5.4 percent GDP growth, but it was lost in the rising inflation and the failure of political leadership. Figueiredo's heart condition led to bypass surgery in the United States, removing him from control of the situation. In an impressive display, millions of Brazilians took to the streets in all the major cities demanding a direct vote (diretas já! ) in the choice of the next president. In April 1984, Congress failed to achieve the necessary numbers to give the people their wish, and the choice was left to an electoral college. Figueiredo did not act forcefully to back a preference, so it became a scramble as candidates pursued the collegial votes.

On January 15, 1985, the electoral college elected Tancredo Neves of Minas Gerais, Vargas's minister of justice in the 1950s, and former federal deputy, senator, and prime minister. Neves was a sensible politician with a reputation for honesty. However, he collapsed the night before his inaugural, and the presidency passed to Vice President José Sarney (president, 1985-90), long-time supporter of the military regime. Neves died on April 21. The hopes that 1985 would be a quick transition to a new regime faded as Brazilians watched this turn of events in a state of shock. Like the regime changes of 1822, 1889, 1930, 1946, and 1964, the 1985 change also proved to be long and difficult (see Politics, 1985-96, ch. 4).

Brazil - The Society and Its Environment

THE FIFTH LARGEST country in the world, Brazil is the largest country in Latin America and has territory slightly larger than that of the continental United States. Its population, estimated officially at nearly 160 million in mid-1997, is the largest in Latin America and constitutes about half of the population in South America. With 80 percent of its population living in cities and towns, Brazil is one of the most urbanized and industrialized countries in Latin America. São Paulo and Rio de Janeiro are among the ten largest cities in the world. São Paulo, with its 18 million people, is the world's third largest city, after Mexico City and Tokyo. Yet, parts of Brazil's Amazon region, which has some of the world's most extensive wilderness areas, are sparsely inhabited by indigenous peoples still in the process of coming into contact with the modern world.

More than for its superlatives, however, Brazil stands out for its regional and social disparities. Brazil is noted for having one of the most unequal income distributions of any country. In the rural Northeast (Nordeste), there is poverty similar to that found in some African and Asian countries. Although increased urbanization has accompanied economic development, it also has created serious social problems in the cities. Even the wealthiest cities contain numerous shantytowns called favelas.

While in many ways this diversity or heterogeneity makes it similar to other developing countries in Latin America and elsewhere, Brazil is also unique. One of the fascinating elements of this uniqueness is that it is different things at once, presenting different faces or identities of a single coherent whole. Both local and foreign perceptions of Brazil tend to exaggerate particular features, lack a balanced view, and fail to grasp how the parts of the whole fit together. During the twentieth century, for example, Brazil came to be known to the rest of the world and to many of its own inhabitants in picturesque motifs that could best be fit together coherently in terms of a "land of contrasts." The country was considered a tropical paradise famed for its exports (coffee), music (such as Carmen Miranda, samba, and bossa nova), and soccer (thanks to Edson Arantes do Nascimento (Pelé)), as well as the nearly mythical Amazon rain forest. Rio de Janeiro was associated with Sugarloaf (Pão de Açucar), Copacabana, income tax fugitives, and even the mastermind of Britain's "Great Train Robbery" of 1963. On a more serious level, Brazil often was disparaged for its inability to solve basic political and economic problems, such as consolidating democratic institutions, controlling runaway inflation, and servicing the foreign debt. However, the nation is noted for being an emerging industrial power and for constructing giant public works, such as the new capital city of Brasília, the Trans-Amazonian Highway, and the world's largest hydroelectric dam (Itaipu). Brazil also stands out for its leadership role in Latin America and the developing world.

Most Brazilians saw the military regime (1964-85) as a repressive dictatorship, although others regarded it as having saved the country from communism. Brazilian society was viewed as conservative and male chauvinistic, yet simultaneously freewheeling or even licentious, as revealed in its Carnaval (Carnival) festivities. In the 1980s, much of the world saw the Amazon, the world's greatest store of biodiversity, and its native peoples as falling victim to unparalleled destruction. In the early 1990s, the news of massacres of Yanomami Indians, street children, and favela dwellers who inhabit Rio de Janeiro's hillsides sundered Brazil's image of cordiality. Although there were other reasons for pessimism and a continuing identity crisis (Brazil became the first democracy to impeach its president, in December 1992), there were reasons for pride as well (inflation was brought under control in 1994). Was Brazil a "serious country" destined to be a great power, or was it always to remain a land of the future?

One can find ample evidence for countervailing trends: unity and diversity, modernity and tradition, progressive government policies and deeply rooted inequality, tight control by elites and broadening popular participation, principles and pragmatism. There are no simple answers. This chapter examines Brazil's social and environmental complexity and its characteristic paradoxes and nuances of meaning, beginning with the physical setting and moving into the more mercurial social issues, with special attention to how society relates to nature.

Brazil - The Physical Setting

With its expansive territory, Brazil occupies most of the eastern part of the South American continent and its geographic heartland, as well as various islands in the Atlantic Ocean. The only countries in the world that are larger are Russia, Canada, China, and the United States (including Alaska). The national territory extends 4,395 kilometers from north to south (5°16'20" N to 33°44'32" S latitude) and 4,319 kilometers from east to west (34°47'30" E to 73°59'32" W longitude). It spans four time zones, the westernmost of which, in Acre State, is the same as Eastern Standard Time in the United States. The time zone of the capital (Brasília) and of the most populated part of Brazil along the east coast is two hours ahead of Eastern Standard Time, except when it is on its own daylight savings time, from October to February. The Atlantic islands are in the easternmost time zone.

Brazil possesses the archipelago of Fernando de Noronha, located 350 kilometers northeast of its "horn," and several small islands and atolls in the Atlantic--Abrolhos, Atol das Rocas, Penedos de São Pedro e São Paulo, Trindade, and Martim Vaz. In the early 1970s, Brazil claimed a territorial sea extending 362 kilometers from the country's shores, including those of the islands.

On Brazil's east coast, the Atlantic coastline extends 7,367 kilometers. In the west, in clockwise order from the south, Brazil has 15,719 kilometers of borders with Uruguay, Argentina, Paraguay, Bolivia, Peru, Colombia, Venezuela, Guyana, Suriname, and French Guiana (see table 2, Appendix). The only South American countries with which Brazil does not share borders are Chile and Ecuador. A few short sections are in question, but there are no major boundary controversies with any of the neighboring countries.

Brazil - Geology, Geomorphology, and Drainage

In contrast to the Andes, which rose to elevations of nearly 7,000 meters in a relatively recent epoch and inverted the Amazon's direction of flow from westward to eastward, Brazil's geological formation is very old. Precambrian crystalline shields cover 36 percent of the territory, especially its central area. The principal mountain ranges average elevations just under 2,000 meters. The Serra do Mar Range hugs the Atlantic coast, and the Serra do Espinhaço Range, the largest in area, extends through the south-central part of the country (see fig. 3). The highest mountains are in the Tumucumaque, Pacaraima, and Imeri ranges, among others, which traverse the northern border with the Guianas and Venezuela.

In addition to mountain ranges (about 0.5 percent of the country is above 1,200 meters), Brazil's Central Highlands include a vast central plateau (Planalto Central). The plateau's uneven terrain has an average elevation of 1,000 meters. The rest of the territory is made up primarily of sedimentary basins, the largest of which is drained by the Amazon and its tributaries. Of the total territory, 41 percent averages less than 200 meters in elevation. The coastal zone is noted for thousands of kilometers of tropical beaches interspersed with mangroves, lagoons, and dunes, as well as numerous coral reefs.

Brazil has one of the world's most extensive river systems, with eight major drainage basins, all of which drain into the Atlantic Ocean. Two of these basins--the Amazon and Tocantins-Araguaia--account for more than half the total drainage area. The largest river system in Brazil is the Amazon, which originates in the Andes and receives tributaries from a basin that covers 45.7 percent of the country, principally the north and west. The main Amazon river system is the Amazonas-Solimões-Ucayali axis (the 6,762 kilometer-long Ucayali is a Peruvian tributary), flowing from west to east. Through the Amazon Basin flows one-fifth of the world's fresh water. A total of 3,615 kilometers of the Amazon are in Brazilian territory. Over this distance, the waters decline only about 100 meters. The major tributaries on the southern side are, from west to east, the Javari, Juruá, Purus (all three of which flow into the western section of the Amazon called the Solimões), Madeira, Tapajós, Xingu, and Tocantins. On the northern side, the largest tributaries are the Branco, Japurá, Jari, and Negro. The above-mentioned tributaries carry more water than the Mississippi (its discharge is less than one-tenth that of the Amazon). The Amazon and some of its tributaries, called "white" rivers, bear rich sediments and hydrobiological elements. The black-white and clear rivers--such as the Negro, Tapajós, and Xingu--have clear (greenish) or dark water with few nutrients and little sediment.

The major river system in the Northeast is the São Francisco, which flows 1,609 kilometers northeast from the south-central region. Its basin covers 7.6 percent of the national territory. Only 277 kilometers of the lower river are navigable for oceangoing ships. The Paraná system covers 14.5 percent of the country. The Paraná flows south into the Río de la Plata Basin, reaching the Atlantic between Argentina and Uruguay. The headwaters of the Paraguai, the Paraná's major eastern tributary, constitute the Pantanal, the largest contiguous wetlands in the world, covering as much as 230,000 square kilometers.

Below their descent from the highlands, many of the tributaries of the Amazon are navigable. Upstream, they generally have rapids or waterfalls, and boats and barges also must face sandbars, trees, and other obstacles. Nevertheless, the Amazon is navigable by oceangoing vessels as far as 3,885 kilometers upstream, reaching Iquitos in Peru. The Amazon river system was the principal means of access until new roads became more important in the 1970s. The São Francisco was also used for transportation in the past. Dams and locks in the Paraná system have made it an important artery for interstate and international trade in the 1990s.

The various river systems descending from the shields have endowed Brazil with vast hydroelectric potential, estimated at 129,046 megawatts (MW), of which 30,065 MW were in operation or under construction in 1991. The largest hydroelectric projects are Itaipu, in Paraná, with 12,600 MW; Tucuruí, in Pará, with 7,746 MW; and Paulo Afonso, in Bahia, with 3,986 MW.

Brazil - Soils and Vegetation

Although 90 percent of the country is within the tropical zone, the climate of Brazil varies considerably from the mostly tropical North (the equator traverses the mouth of the Amazon) to temperate zones below the Tropic of Capricorn (23°27' S latitude), which crosses the country at the latitude of the city of São Paulo. Brazil has five climatic regions--equatorial, tropical, semiarid, highland tropical, and subtropical.

Temperatures along the equator are high, averaging above 25°C, but not reaching the summer extremes of up to 40°C in the temperate zones. There is little seasonal variation near the equator, although at times it can get cool enough for wearing a jacket, especially in the rain. At the country's other extreme, there are frosts south of the Tropic of Capricorn during the winter (June-August), and in some years there is snow in the mountainous areas, such as Rio Grande do Sul and Santa Catarina. Temperatures in the cities of São Paulo, Belo Horizonte, and Brasília are moderate (usually between 15°C and 30°C), despite their relatively low latitude, because of their elevation of approximately 1,000 meters. Rio de Janeiro, Recife, and Salvador on the coast have warm climates, with average temperatures ranging from 23°C to 27°C, but enjoy constant trade winds. The southern cities of Porto Alegre and Curitiba have a subtropical climate similar to that in parts of the United States and Europe, and temperatures can fall below freezing in winter.

Precipitation levels vary widely. Most of Brazil has moderate rainfall of between 1,000 and 1,500 millimeters a year, with most of the rain falling in the summer (between December and April) south of the Equator. The Amazon region is notoriously humid, with rainfall generally more than 2,000 millimeters per year and reaching as high as 3,000 millimeters in parts of the western Amazon and near Belém. It is less widely known that, despite high annual precipitation, the Amazon rain forest has a three- to five-month dry season, the timing of which varies according to location north or south of the equator.

High and relatively regular levels of precipitation in the Amazon contrast sharply with the dryness of the semiarid Northeast, where rainfall is scarce and there are severe droughts in cycles averaging seven years. The Northeast is the driest part of the country. The region also constitutes the hottest part of Brazil, where during the dry season between May and November, temperatures of more than 38°C have been recorded. However, the sertão , a region of semidesert vegetation used primarily for low-density ranching, turns green when there is rain. Most of the Center-West has 1,500 to 2,000 millimeters of rain per year, with a pronounced dry season in the middle of the year, while the South and most of the Atlantic coast as far north as Salvador, Bahia, in the Northeast, have similar amounts of rainfall without a distinct dry season.

Brazil - Geographic Regions

Brazil's twenty-six states and the Federal District (Distrito Federal) are divided conventionally into five regions--North (Norte), Northeast, Southeast (Sudeste), South, and Center-West (see fig. 4). In 1996 there were 5,581 municipalities (municípios ), which have municipal governments. Many municipalities, which are comparable to United States counties, are in turn divided into districts (distritos ), which do not have political or administrative autonomy. In 1995 there were 9,274 districts. All municipal and district seats, regardless of size, are considered officially to be urban. For purely statistical purposes, the municipalities were grouped in 1990 into 559 micro-regions, which in turn constituted 136 meso-regions. This grouping modified the previous micro-regional division established in 1968, a division that was used to present census data for 1970, 1975, 1980, and 1985.

Each of the five major regions has a distinct ecosystem. Administrative boundaries do not necessarily coincide with ecological boundaries, however. In addition to differences in physical environment, patterns of economic activity and population settlement vary widely among the regions. The principal ecological characteristics of each of the five major regions, as well as their principal socioeconomic and demographic features, are summarized below.

The equatorial North, also known as the Amazon or Amazônia, includes, from west to east, the states of Rondônia, Acre, Amazonas, Roraima, Pará, Amapá, and, as of 1988, Tocantins (created from the northern part of Goiás State, which is situated in the Center-West). Rondônia, previously a federal territory, became a state in 1986. The former federal territories of Roraima and Amapá were raised to statehood in 1988.

With 3,869,638 square kilometers, the North is the country's largest region, covering 45.3 percent of the national territory (see table 3, Appendix). The region's principal biome is the humid tropical forest, also known as the rain forest, home to some of the planet's richest biological diversity. The North has served as a source of forest products ranging from "backlands drugs" (such as sarsaparilla, cocoa, cinnamon, and turtle butter) in the colonial period to rubber and Brazil nuts in more recent times. In the mid-twentieth century, nonforest products from mining, farming, and livestock-raising became more important, and in the 1980s the lumber industry boomed. In 1990, 6.6 percent of the region's territory was considered altered by anthropic (man-made) action, with state levels varying from 0.9 percent in Amapá to 14.0 percent in Rondônia.

In 1996 the North had 11.1 million inhabitants, only 7 percent of the national total. However, its share of Brazil's total had grown rapidly in the 1970s and early 1980s as a result of interregional migration, as well as high rates of natural increase. The largest population concentrations are in eastern Pará State and in Rondônia. The major cities are Belém and Santarém in Pará, and Manaus in Amazonas. Living standards are below the national average. The highest per capita income, US$2,888, in the region in 1994, was in Amazonas, while the lowest, US$901, was in Tocantins.

The nine states that make up the Northeast are Alagoas, Bahia, Ceará, Maranhão, Paraíba, Pernambuco, Piauí, Rio Grande do Norte, and Sergipe. The former federal territory of Fernando de Noronha was incorporated into Pernambuco State in 1988. For planning or ecological purposes, Maranhão west of 44° W longitude, most of which until recently was covered with "pre-Amazon" forest (that is, transition from the cerrado or caatinga to tropical forest), is often included in the Amazon region.

The Northeast, with 1,561,178 square kilometers, covers 18.3 percent of the national territory. Its principal biome is the semiarid caatinga region, which is subject to prolonged periodic droughts. By the 1990s, this region utilized extensive irrigation. In an area known as the forest zone (zona da mata ), the Atlantic Forest, now almost entirely gone, once stretched along the coastline as far north as Rio Grande do Norte. Sugar plantations established there in colonial times persisted for centuries. Between the mata and the sertão lies a transition zone called the agreste , an area of mixed farming. In 1988-89, 46.3 percent of the region had been subjected to anthropic activity, ranging from a low of 10.8 percent in Maranhão to a high of 77.2 percent in Alagoas.

Because its high rates of natural increase offset heavy out-migration, the Northeast's large share of the country's total population declined only slightly during the twentieth century. In 1996 the region had 45 million inhabitants, 28 percent of Brazil's total population. The population is densest along the coast, where eight of the nine state capitals are located, but is also spread throughout the interior. The major cities are Salvador, in Bahia; Recife, in Pernambuco; and Fortaleza, in Ceará. The region has the country's largest concentration of rural population, and its living standards are the lowest in Brazil. In 1994 Piauí had the lowest per capita income in the region and the country, only US$835, while Sergipe had the highest average income in the region, with US$1,958.

The Southeast consists of the four states of Espírito Santo, Minas Gerais, Rio de Janeiro, and São Paulo. Its total area of 927,286 square kilometers corresponds to 10.9 percent of the national territory. The region has the largest share of the country's population, 63 million in 1991, or 39 percent of the national total, primarily as a result of internal migration since the mid-nineteenth century until the 1980s. In addition to a dense urban network, it contains the megacities of São Paulo and Rio de Janeiro, which in 1991 had 18.7 million and 11.7 million inhabitants in their metropolitan areas, respectively. The region combines the highest living standards in Brazil with pockets of urban poverty. In 1994 São Paulo boasted an average income of US$4,666, while Minas Gerais reported only US$2,833.

Originally, the principal biome in the Southeast was the Atlantic Forest, but by 1990 less than 10 percent of the original forest cover remained as a result of clearing for farming, ranching, and charcoal making. Anthropic activity had altered 79.5 percent of the region, ranging from 75 percent in Minas Gerais to 91.1 percent in Espírito Santo. The region has most of Brazil's industrial production. The state of São Paulo alone accounts for half of the country's industries. Agriculture, also very strong, has diversified and now uses modern technology.

The three states in the temperate South--Paraná, Rio Grande do Sul, and Santa Catarina--cover 577,214 square kilometers, or 6.8 percent of the national territory. The population of the South in 1991 was 23.1 million, or 14 percent of the country's total. The region is almost as densely settled as the Southeast, but the population is more concentrated along the coast. The major cities are Curitiba and Porto Alegre. The inhabitants of the South enjoy relatively high living standards. Because of its industry and agriculture, Paraná had the highest average income in 1994, US$3,674, while Santa Catarina, a land of small farmers and small industries, had slightly less, US$3,405.

In addition to the Atlantic Forest and pine woods, much of which were cleared in the post-World War II period, the South contains pampa grasslands, similar to those of Argentina and Uruguay, in the extreme south. In 1982, 83.5 percent of the region had been altered by anthropic activity, with the highest level (89.7 percent) in Rio Grande do Sul, and the lowest (66.7 percent) in Santa Catarina. Agriculture--much of which, such as rice production, is carried out by small farmers--has high levels of productivity. There are also some important industries.

The Center-West consists of the states of Goiás, Mato Grosso, and Mato Grosso do Sul (separated from Mato Grosso in 1979), as well as the Federal District, site of Brasília, the national capital. Until 1988 Goiás State included the area that then became the state of Tocantins in the North.

The Center-West has 1,612,077 square kilometers and covers 18.9 percent of the national territory. Its main biome is the cerrado , the tropical savanna in which natural grassland is partly covered with twisted shrubs and small trees. The cerrado was used for low-density cattle-raising in the past but is now also used for soybean production. There are gallery forests along the rivers and streams and some larger areas of forest, most of which have been cleared for farming and livestock. In the north, the cerrado blends into tropical forest. It also includes the Pantanal wetlands in the west, known for their wildlife, especially aquatic birds and caymans. In the early 1980s, 33.6 percent of the region had been altered by anthropic activities, with a low of 9.3 percent in Mato Grosso and a high of 72.9 percent in Goiás (not including Tocantins). In 1996 the Center-West region had 10.2 million inhabitants, or 6 percent of Brazil's total population. The average density is low, with concentrations in and around the cities of Brasília, Goiânia, Campo Grande, and Cuiabá. Living standards are below the national average. In 1994 they were highest in the Federal District, with per capita income of US$7,089 (the highest in the nation), and lowest in Mato Grosso, with US$2,268.

Brazil - The Environment

The environmental problem that attracted most international attention in Brazil in the 1980s was undoubtedly deforestation in the Amazon. Of all Latin American countries, Brazil still has the largest portion (66 percent) of its territory covered by forests, but clearing and burning in the Amazon proceeded at alarming rates in the 1970s and 1980s. Most of the clearing resulted from the activities of ranchers, including large corporate operations, and a smaller portion resulted from slash-and-burn techniques used by small farmers.

Deforestation in the Amazon declined from levels averaging 22,000 square kilometers per year during the 1970-88 period to about 11,000 square kilometers per year between 1988 and 1991. There was controversy about the levels in the mid-1990s. Knowledgeable experts placed the level of accumulated deforestation at about 15 percent in 1996, as opposed to 12 percent in 1991. Although unseasonal rainfall patterns may explain some year-to-year variation, the basic cause for the decline in deforestation after 1987 was economic crisis. There was insufficient capital, credit, or incentive for large-scale clearing, as well as insufficient public investment to stimulate new migration. Migration to the Amazon also fell quickly in the late 1980s. More effective enforcement of government regulations and bad publicity for large offenders, both of which were associated with changes in public opinion about the environment, also played a part. Technical changes involved in the transition from horizontal expansion of agriculture to increasing productivity also accounted for decreasing rates of deforestation.

Desertification, another important environmental problem in Brazil, only received international attention following the United Nations Conference on the Environment and Development, also known as the Earth Summit, held in Rio de Janeiro in June 1992. Desertification means that the soils and vegetation of drylands are severely degraded, not necessarily that land turns into desert. In the early 1990s, it became evident that the semiarid caatinga ecosystem of the Northeast was losing its natural vegetation through clearing and that the zone was therefore running the risk of becoming even more arid, as was occurring also in some other regions.

In areas where agriculture is more intense and developed, there are serious problems of soil erosion, siltation and sedimentation of streams and rivers, and pollution with pesticides. In parts of the savannas, where irrigated soybean production expanded in the 1980s, the water table has been affected. Expansion of pastures for cattle-raising has reduced natural biodiversity in the savannas. Swine effluents constitute a serious environmental problem in Santa Catarina in the South.

In urban areas, at least in the largest cities, levels of air pollution and congestion are typical of, or worse than, those found in cities in developed countries. At the same time, however, basic environmental problems related to the lack of sanitation, which developed countries solved long ago, persist in Brazil. These problems are sometimes worse in middle-sized and small cities than in large cities, which have more resources to deal with them. Environmental problems of cities and towns finally began to receive greater attention by society and the government in the 1990s.

According to many critics, the economic crisis in the 1980s worsened environmental degradation in Brazil because it led to overexploitation of natural resources, stimulated settlement in fragile lands in both rural and urban areas, and weakened environmental protection. At the same time, however, the lower level of economic activity may have reduced pressure on the environment, such as the aforementioned decreased level of investment in large-scale clearing in the Amazon. That pressure could increase if economic growth accelerates, especially if consumption patterns remain unchanged and more sustainable forms of production are not found.

In Brazil public policies regarding the environment are generally advanced, although their implementation and the enforcement of environmental laws have been far from ideal. Laws regarding forests, water, and wildlife have been in effect since the 1930s. Brazil achieved significant institutional advances in environmental policy design and implementation after the Stockholm Conference on the Environment in 1972. Specialized environmental agencies were organized at the federal level and in some states, and many national parks and reserves were established. By 1992 Brazil had established thirty-four national parks and fifty-six biological reserves (see fig. 5). In 1981 the National Environment Policy was defined, and the National System for the Environment (Sistema Nacional do Meio Ambiente--Sisnama) was created, with the National Environmental Council (Conselho Nacional do Meio Ambiente--Conama) at its apex, municipal councils at its base, and state-level councils in between. In addition to government authorities, all of these councils include representatives of civil society.

The 1988 constitution incorporates environmental precepts that are advanced compared with those of most other countries. At that time, the Chamber of Deputies (Câmara dos Deputados) established its permanent Commission for Defense of the Consumer, the Environment, and Minorities. In 1989 the creation of the Brazilian Institute for the Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis--Ibama) joined together the federal environment secretariat and the federal agencies specializing in forestry, rubber, and fisheries. In 1990 the administration of Fernando Collor de Mello (president, 1990-92) appointed the well-known environmentalist José Lutzemberger as secretary of the environment and took firm positions on the environment and on Indian lands. In 1992 Brazil played a key role at the Earth Summit, not only as its host but also as negotiator on sustainable development agreements, including the conventions on climate and biodiversity. The Ministry of Environment was created in late 1992, after President Collor had left office. In August 1993, it became the Ministry of Environment and the Legal Amazon and took a more pragmatic approach than had the combative Lutzemberger. However, because of turnover in its leadership, a poorly defined mandate, and lack of funds, its role and impact were limited. In 1995 its mandate and name were expanded to include water resources--the Ministry of Environment, Hydraulic Resources, and the Legal Amazon--it began a process of restructuring to meet its mandate of "shared management of the sustainable use of natural resources." In 1997 the Commission on Policies for Sustainable Development and Agenda 21 began to function under the aegis of the Civil Household. One of its main tasks was to prepare Agenda 21 (a plan for the twenty-first century) for Brazil and to stimulate preparation of state and local agendas.

Institutional development at the official level was accompanied and in part stimulated by the growth, wide diffusion, and growing professional development of nongovernmental organizations (NGOs) dedicated to environmental and socio-environmental causes. The hundreds of NGOs throughout Brazil produce documents containing both useful information and passionate criticisms. Among the Brazilian environmental NGOs, the most visible are SOS Atlantic Forest (SOS Mata Atlântica), the Social-Environmental Institute (Instituto Sócio-Ambiental--ISA), the Pro-Nature Foundation (Fundação Pró-Natureza--Funatura), and the Amazon Working Group (Grupo de Trabalho Amazônico--GTA). The Brazilian Forum of NGOs and Social Movements for the Environment and Development and the Brazilian Association of Nongovernmental Organizations (Associacão Brasileira de Organizações Não-Governamentais--ABONG) are national networks, and there are various regional and thematic networks as well. The main international environmental NGOs that have offices or affiliates in Brazil are the World Wildlife Fund (WWF), Conservation International (CI), and Nature Conservancy.

Especially after the events of the late 1980s, international organizations and developed countries have allocated significant resources for the environmental sector in Brazil. In 1992 environmental projects worth about US$6.8 million were identified, with US$2.6 in counterpart funds (funds provided by the Brazilian government). More than 70 percent of the total value was for sanitation, urban pollution control, and other urban environmental projects. Thus, the allocation of resources did not accord with the common belief that funding was influenced unduly by alarmist views on deforestation in the Amazon.

At the turn of the century, Brazil's population was 17,438,434. By 1950 it had grown to 51,944,397, and in 1970 it reached 93,139,037. By 1991 Brazil was the world's sixth most populous country, with about 2.7 percent of the world's 5.3 billion people or 147,053,940 inhabitants. In July 1996, the population was counted as being 157,079,573, but estimated in 1997 to be nearly 160 million. Projections indicate a total population of 169 million in 2000 and 211 million in 2020, and population stability at about 250 million in 2050. The population growth rate for the 1992 to 2000 period is estimated at 1.5 percent per year. As a result of the decline in mortality and continued high fertility during the 1950s and 1960s, the average growth rate was nearly 3 percent per year. Subsequent to a decrease in total fertility, the growth rate dropped to 2.5 percent in the 1970s and 1.9 percent in the 1980s.

Average population density in Brazil in 1994 was 18.5 inhabitants per square kilometer. There was a wide variation between the densely populated Southeast and South, on the one hand, and the sparse North and Center-West, on the other, with the Northeast at intermediate levels. In comparison, in 1991 the United States (including Alaska) had an average of twenty-five inhabitants per square kilometer; France, 100; the United Kingdom, 100; China, 110; and Canada, three.

According to the 1996 count, the most populous region in the country is still the Southeast (63 million inhabitants), followed by the Northeast (45 million), the South (23.1 million), the North (11.1 million), and the Center-West (10.2 million). The most inhabited states are São Paulo, Minas Gerais, Rio de Janeiro, Bahia, Rio Grande do Sul, and Paraná. These states all lie along the Atlantic coast.

In some rural areas and many cities, particularly in major metropolitan areas, females outnumber males. The historical predominance of women over men in the Brazilian population has persisted. The 1996 count showed that there were ninety-seven men for every 100 women and that the total number of women exceeded the number of men by 5 million.

The average age of the Brazilian population has increased as a result of a continued decrease in mortality and fertility. Between 1980 and 1990, the proportional share of children from birth to age fourteen decreased from 38.2 to 34.7 percent, while the share for those of age fifteen to sixty-four increased from 57.8 to 61.1 percent. The proportion of elderly (age sixty-five or greater) increased from 4.0 to 4.2 percent and is projected to reach 9.0 percent by the year 2020. In all regions of the country, the count registered an increased number of people of ages fifteen to sixty-four and of older people over sixty-four years old. In the Southeast, for example, the proportion of people in the former age bracket increased from the 61.7 percent registered in 1980 to 63.6 percent in 1991, while the number of older people increased from 4.2 percent to 5.1 percent.

The demographic transition in Brazil becomes apparent as the bottom of the very wide-based pyramid, typical of developing countries with high birthrates, begins to narrow (see fig. 6). Further declines in the fertility rate, estimated at 2.44 children born per woman in 1994, eventually will lead to a pyramid that is shaped more like a bullet, with cohorts under age sixty of roughly equal size. Senior citizens will live longer, and the proportion of young people will decline. In the year 2000, young people will account for 28.3 percent of the population and senior citizens, 8 percent. Couples will have fewer children, and the fertility rate may be less than 2.2 children per woman, the replacement level.

As is typical in demographic transitions, declines in mortality preceded declines in fertility in Brazil, but the process took only a few decades rather than centuries, as it did in developed countries. The death rate started to fall in the 1940s because of the expanding public health system, urbanization, and sanitation. The crude death rate in 1995 was eight per 1,000 population, a notable decrease from the 1960-65 rate of 12.3. The 1995 level, which is similar to that of developed countries, resulted from the age structure being still relatively younger.

Life expectancy at birth, which is a measure of mortality that is not affected by different age structures, began to rise in Brazil in the 1940s. It increased from 42.7 years in 1940 to 52.7 years in 1970 and 67.1 years in 1995. It is projected to reach 68.5 years in 2000 and 75.5 years in 2020. Life expectancy for women is about seven years greater than that for men, but the differential is decreasing.

A decline in mortality has occurred in all regions, but strong regional variations in life expectancy persist. The lowest levels are found in the Northeast (65.4 years in 1995) and the highest in the South (69.4 years in 1995), slightly higher than the Southeast. The North and Center-West regions have levels of life expectancy close to the national average. Within the socioeconomic strata, higher life expectancy is strongly associated with higher family income. Mortality is generally higher in rural than in urban areas, except for the lowest income groups.

In the past, the principal causes of death in Brazil were infectious and contagious diseases, especially diarrhea and intestinal parasites among infants, as well as tuberculosis, measles, and respiratory diseases (for a discussion of infant mortality, see Indicators of Health, this ch.). As these were brought under control in the postwar period, primarily in the more developed regions, degenerative diseases such as cardiovascular disorders and cancer became proportionately more prevalent. Deaths from external causes, including violence and traffic accidents, also gained importance.

In 1996 the crude birthrate was estimated at 21.16 births per 1,000 population, a significant reduction from 42.1 for the 1960-65 period. As in the case of mortality, crude birthrates are affected by the age structure and, therefore, difficult to compare among countries and regions or over time. It is preferable to use the total fertility rate, a standardized measure that corresponds to the average number of children per woman at age forty-nine, the end of her reproductive life, assuming that she has survived and followed the fertility patterns characteristic of each age category.

Brazil's total fertility rate dropped from close to six in the 1940s and 1950s to 3.3 in 1986 to 2.44 in 1994, not much higher than the replacement level of 2.2. Fertility declined in urban and rural areas, in all regions, and among all socioeconomic strata, although the rates continued to vary. In large countries, such a rapid and generalized fertility decline had been observed previously only in China, where official policy placed intense pressure on couples to have only one child. Projections indicate a total fertility rate of 2.0 in the year 2000 and 1.8 in 2020, lower than replacement.

The Brazilian birthrate began to decline noticeably in the 1970s, by which time socioeconomic changes had made large families less affordable than in the traditional social and economic structure in rural areas. In the past, especially in rural areas, children started work early and supported their parents in old age, and the children did not cost much to raise. In the 1990s, they attend school for longer periods and cost more to support.

Meanwhile, new methods of birth control, primarily pills and female sterilization, became widely available in the 1970s. Oral contraceptives are sold over the counter without prescription. Surgical sterilization, which is practiced in Brazil more than any other country, is typically performed during cesarean deliveries. Such deliveries comprised nearly a third of all deliveries in the 1980s. Surgical sterilization is of questionable legality, but is often carried out by doctors who are paid for the cesarean section by the public health system and receive private payment for extra services on the side.

The number of Brazilian couples opting for sterilization as a means of contraception increased by more than 40 percent during the 1986-96 period, based on the Demographic and Health Survey carried out by Bemfam, an NGO. The survey, conducted between March and July 1996, interviewed 12,612 women between fifteen and forty-nine years of age as well as 2,949 men between fifteen and fifty-nine years. The survey found that 40.1 percent of married women or women living with partners had been sterilized, as compared with 26.9 percent in 1986. In 1986 only 0.8 percent of males had had a vasectomy, as compared with 2.6 percent in 1996. The Bemfam survey showed that the average age at which women are sterilized was 28.9 years in 1996, as compared with 31.4 years in 1986.

In the early 1990s, the use of birth-control pills and female sterilization (tubal ligation) continued to contribute to the fertility decline in Brazil. About 65 percent of Brazilian women used contraceptives, which is comparable with levels in developed countries. Of the women who used some method and were in union, 44 percent were sterilized. About 7 percent used rhythm, while other contraceptives or methods were rarer.

Abortion in Brazil is significant. In the early 1990s, some 1.4 million abortions were performed each year, almost all of which were technically illegal. This corresponds to approximately one abortion for every two live births. The only cases in which abortion is not subject to legal sanctions in Brazil are rape and danger to the mother's life, but the law is not enforced effectively. The practice of unsafe, clandestine abortions helps to explain why Brazil has the fifth highest maternal mortality rate in Latin America, estimated at 141 deaths per 1,000 births, in contrast to eight in the United States.

A fertility decline in Brazil occurred in the absence of any official policy in favor of controlling birthrates. The government's stance was one of laissez-faire. Although it did not promote family planning, largely because of the influence of the Roman Catholic Church, the government did little to interfere with the widespread practice of contraception among the population at large. Nor did the population pay much heed to religious dogma. In the case of fertility regulation, social change in Brazil occurred from the bottom up. Women took much of the initiative.

In the 1980s, the Ministry of Health included family planning services as part of an integrated women's health program. However, because of a severe lack of funds, the direct effects of the program were limited. Changing public opinion and the women's movement in Brazil favored changes in official policy, which were slow to come about. The 1988 constitution included the right to plan freely the number of children. A Family Planning Law took effect in 1997 in order to regulate sterilization, making it available in the public health network but forbidding it during deliveries, as well as provide birth-control alternatives through the same network.

Immigration from Europe and the African slave trade, which were the prime sources of population growth during much of Brazil's history, became demographically insignificant by the 1930s. Subsequently, there were massive transfers of internal migrants from the Northeast and Minas Gerais to the growing urban centers of São Paulo and Rio de Janeiro. Over time, there were successive waves of significant but less voluminous counterflows to frontier areas in Paraná, the Center-West, and finally the Amazon. The government's colonization plans, which included settlement along the Trans-Amazonian Highway, stimulated internal migration. However, the last cycle of frontier expansion came to a close, at least temporarily, in the late 1980s.

During the 1950s, 1960s, and 1970s, some 20 million people moved from rural to urban areas in Brazil. This population movement constitutes one of the largest of its kind in history. Brazil's urban population (by the official definition) grew at rates of about 5 percent per year and accounted for 56 percent of the total population in 1970, 68 percent in 1980, and 75 percent in 1991. During most of the post-World War II period, the largest cities grew fastest as a result of gradual migration to progressively larger cities. In the 1980s, however, the proportion of Brazil's population living in metropolitan areas dropped from 29 percent to 28 percent. The new pattern of population redistribution revealed by the 1991 census involved less interregional migration, with more people staying in their regions of origin or moving to large cities nearby rather than to megacities.

Numerous efforts have been made at the policy level to stimulate settlement in the interior, including colonization in the Amazon, and to limit the growth of the largest cities while strengthening middle-sized cities. Despite these efforts, however, most public policies have continued to favor population concentration in the Southeast and in large cities by promoting industry at the cost of agriculture and by providing services and benefits primarily to urban residents.

During the 1980s, as a result of economic crisis and improved transportation services, emigration from Brazil increased to other countries, including the United States, Canada, Portugal, and Japan. For the first time ever, Brazil became a net exporter of population and thus entered a new stage in its demographic history. Some of the emigrants sought employment in menial jobs in developed countries; others were skilled personnel, including scientists and engineers. However, a noteworthy reverse brain drain also took place, with skilled workers from other Latin American countries and Europe constituting a significant proportion of new immigrants. Immigration increased from neighboring countries, especially members of the Common Market of the South (Mercado Comum do Sul--Mercosul; see Glossary), including Argentina, Uruguay, and Paraguay, as well as from some countries in Africa and Asia.

Brazil inherited a highly stratified society from the colonial system and from slavery, which persisted for nearly three generations after independence in 1822. The legacy of sharp socioeconomic stratification is reflected in Brazil's highly skewed income distribution, among the world's worst (see Inequality and Poverty, ch. 3). The relatively high average per capita income (US$4,086 in 1995) masks deep inequality. During the postwar period, income concentration and regional disequilibrium did not change significantly despite numerous government policies aimed at greater equity. Poverty was widespread, reaching the lowest levels in the rural parts of the Northeast, but also including pockets of urban poverty in the largest cities in the developed regions. In 1990 the number of indigents suffering from extreme poverty (see Glossary) was estimated to be at least 32 million, about one-fifth of the country's total population. This included an estimated 9.6 percent of the residents of metropolitan areas, 18.4 percent of the population of other urban areas, and 42.8 percent of the rural population.

Socioeconomic inequality involves subtle forms of residential, educational, and workplace discrimination, in such ways that members of distinct socioeconomic strata tend to live, work, and circulate in different settings. The well-to-do live in chic neighborhoods, usually centrally located, go to private schools, drive or ride in cars, and shop at malls. The urban poor live in favelas or distant housing projects, take long bus trips to work, go to public schools or drop out, and shop at smaller supermarkets or local shops. The rural poor in the country's interior are practically invisible to the urban upper and middle classes.

Despite such social segregation, class solidarity is not strong. Instead of horizontal class ties, numerous cross-cutting vertical relationships involve personal dependence on individuals who have more property and prestige. Given the circumstances, these relationships of clientelism and paternalism are advantageous for both patrons and clients. Because of the lack of effective government services and real possibilities for class action, the poor have few alternatives but to seek the protection of patrons. The traditional rural forms of patronage have been described as colonelism (coronelismo --see Glossary), referring to the fact that rural bosses often had military titles (see The Old or First Republic, 1889-1930, ch. 1). Among other things, colonels (coronéis ) used their influence over their clientele for electoral purposes. Such vertical interpersonal ties continue to be stronger in rural areas, especially in the Northeast, but they also persist in other forms in urban settings and at various levels of the socioeconomic scale. Even members of the modern middle class tend to have lower-income persons or families dependent on them for such things as domestic employment and economic or health emergencies. They, in turn, seek help from powerful friends and relatives.

Contrary to dualistic stereotypes of Latin American societies, Brazilian class structure cannot be reduced to a wealthy landed elite versus masses of poor peasants and workers. The middle sectors or classes have been significant at least since the nineteenth century. Sectors of Brazil's population that were neither slave owners nor slaves began to grow in the colonial period, when craftsmen, shopkeepers, small farmers, freed slaves, and persons of mixed racial origin began to outnumber slave owners and eventually slaves. During the twentieth century, the middle sectors continued to grow. The present middle class does not own large properties, industries, or firms but also is not destitute. It consists largely of a technical work force--clerks, professionals, teachers, salespersons, public servants, and highly skilled workers. Its position is based more on knowledge and skills than on property. A surge of upward mobility strengthened the middle class during the "economic miracle" in the late 1960s and early 1970s. At the same time, blue-collar workers with middle to low levels of skills constitute a lower middle class that is numerically very significant.

For reasons of property transmission and religion, Brazilian society was originally strongly patriarchal, but there was also strong tension between rigid norms of Iberian origin and the extenuating circumstances of frontier life, where conditions were not favorable for compliance with the norms. The difficulty of putting Roman Catholic values into effective practice in the context of poverty, isolation, and unbalanced male/female sex ratios (number of men per 100 women) reinforced the Mediterranean double moral standard for men and women. Men were expected to demonstrate their masculinity, while proper women were supposed to remain virgins until marriage and to be faithful to their husbands. This double standard also favored frequent consensual unions, illegitimacy, and prostitution. Such behavior was not entirely acceptable but was tolerated more readily in Brazil, generally speaking, than in North America and the rest of Latin America.

Although women were allowed open access to schools and employment around the turn of the century and suffrage on a national level in 1933, they were not on an equal footing with men in family affairs. Men were automatically heads of households, and married women were legally subordinate to their husbands. Because of the inconvenience caused by informal remarriage, divorce was made legal in 1977. Under the constitution of 1988, women became entirely equal to men for all legal purposes.

Female participation in the labor force grew dramatically in the 1970s and 1980s, as a result of new employment patterns, especially the expansion of the services sector, and economic pressures on family income. Women are most commonly employed as domestic servants. The economic participation of women in Brazil rose from 18 percent in 1970 to 27 percent by 1980 and 30 percent by 1990 (although such figures might underestimate actual rates of participation by failing to include the informal activities that characterize small and/or household enterprises). More than 70 percent of women in the labor force are employed by the services sector (as compared with 42 percent of men), and women tend to be underrepresented among the formal labor force in agricultural and industrial activities. Patterns of labor force participation vary considerably by region. In the early 1990s, rates of female labor force participation ranged from 36.8 percent in Rio de Janeiro to 33.1 percent in the Northeast. In Brazil, as in most other countries in Latin America, rates of females participating in the job market appear to increase with education, especially the proportion of single educated women entering the formal sector rather than the informal and self-employed sectors.

There is a considerable wage gap between men and women. According to one recent estimate, the differential between women and men is less pronounced in urban areas (for example, women earn on average 77.8 percent of men's wages in Rio de Janeiro and 73.6 percent in São Paulo), and most pronounced in the Northeast (where, on average, women earn 63.5 percent of the wages of men). Average wages are also considerably lower in the Northeast, where women's average hourly wages are 42 percent of the prevailing average in Rio de Janeiro. According to recent economic studies, only a small portion (between 11 percent and 19 percent of wage differentials in the formal labor force) can be attributed to differences between men and women in their endowments (such as education or experience). For the most part, the wage gap probably reflects discriminatory practices.

Recent decades have also been characterized by significant changes in family structures. For example, the available data suggest a considerable increase over the past decades in female-headed households, which include the poorest of the poor, from 13 percent in 1970 to 16 percent in 1980 and 20 percent by the late 1980s. This process has been termed the "feminization of poverty." Once again, there are considerable differences among regions; in the urban North Region, for example, over 24 percent of households were headed by women in the late 1980s, while their relative share in the South was closer to 16 percent.

Despite persistent gender inequality, the status of women in Brazil is improving on various fronts. As a rule, there are as many females as males in schools, even at the highest levels, and professions that traditionally were dominated by males, such as law, medicine, dentistry, and engineering, are becoming more balanced in terms of gender, if there are not already more women students than men. More women than men are in the National Lawyers' Association (Associação Nacional dos Advogados). The attitudes and practices of young people are generally not as sexist as those of their parents, at least among youth of families with higher income and education.

Nevertheless, there are still relatively few women in positions of power. They have a significant, albeit limited, presence in high levels of federal government, although they have better representation at the state and municipal levels. Since the government of João Baptista do Oliveira Figueiredo (president, 1979-85), several female ministers have been in the cabinet, and in 1994 two women were candidates for vice president. By 1994 women made up only 7 percent of the Congress.

Women's movements grew in the 1980s, when a National Council on Women's Rights (Conselho Nacional de Direitos da Mulher--CNDM) was created. Originally, the feminist movement was closely connected to human rights movements and resistance to the military regime. In the 1980s and 1990s, attention shifted to violence against women, especially domestic violence and sexual abuse and harassment. One original response to this kind of problem was the creation of special police stations for women. Women's movements also mobilized support for reproductive health and rights, as defined in the 1994 International Conference on Population and Development, held in Cairo.

The population under age eighteen was only 30.7 percent of the total population in 1991. This significant decrease relative to previous decades--it was over 42.6 percent in 1960--was almost entirely the result of rapid fertility decline. Compared with developed countries, as mentioned above, Brazil still has a relatively young population.

Overall, school enrollment in the early 1990s reached about 90 percent of school-age children (seven to fourteen), although there was wide variation, with lower coverage among rural and low-income populations. There were also high levels of repetition, and only a minority of those who entered first grade completed the eight grades of fundamental schooling. One reason for the high dropout rate was child labor. In 1990, 18 percent of the children between the ages of ten and fourteen participated in economic activity.

Because of marital instability, unwanted pregnancies, and above all poverty, there are thousands of apparently homeless "street children" (meninos de rua ) in Brazil. The numbers require cautious use because, in addition to about 10,000 children who actually live in the streets, this category also includes many children who work or otherwise generate income to help their families. Truly homeless street children constitute a small minority. They attracted considerable public and media attention nationally and internationally in the early 1990s because of their high visibility and frequent petty thievery, as well as cases of violent retaliation, including murder, by the police and local businesspeople.

At least officially, minors have long been protected by the Brazilian legal system. Judges in juvenile cases (juizes de menores ) protect their interests, and a network of institutions, in theory, cares for their welfare. In 1990, in response to the problems of youth, the Collor government passed special legislation to establish children's rights, known as the Children's Statute, and created the Brazilian Center of Infancy and Adolescence (Centro Brasileiro de Infância e Adolescência--CBIA) to carry out special programs for children in these age-groups. The government also promoted the establishment of federal, state, and municipal councils of childhood and adolescence, which included participants from government agencies and civil society. The National Street Children's Movement is an NGO. The United Nations Children's Fund (UNICEF) developed the Pact for Childhood, and the National Conference of Brazilian Bishops (Conferência Nacional dos Bispos do Brasil--CNBB) supported the Children's Pastoral Service.

The proportion of elderly in the population increases as fertility declines and longevity increases. The absolute numbers grow faster than the total population. The proportion of the Brazilian population age sixty-five and older grew from 6.4 percent in 1960 to 7.6 percent in 1980 and 8 percent in 1991, or about 11.7 million. By 2020 the number is expected to increase to 15 percent of the population, or about 33 million. Brazil faces particular problems with the aged because of difficulties in employing them (younger and better trained workers are preferred over middle-aged workers) and a lack of appropriate means to care for them. As people live longer, the number of siblings and children drops, and population mobility increases. Consequently, older people are less likely to have children or other relatives living nearby who are willing and able to care for them. In 1996 the country was shocked by the number of deaths of elderly living in very poor conditions in publicly supported homes for senior citizens, especially the case of the Santa Genoveva Clinic in Rio de Janeiro.

The government-run social security system provides minimal pensions for retired people, including those in rural areas who did not contribute to the system as employees. However, health care becomes expensive in old age, especially for the so-called degenerative diseases, and the cost of private health insurance becomes prohibitive. Retired persons were successful in organizing pressure groups to protect the real value, after inflation, of their pensions in the early 1990s by keeping them pegged to the minimum wage. Nonetheless, these pensions were still far from being sufficient to care for the needs of most elderly persons.

The first European immigrants to Brazil were of Iberian origin, primarily Portuguese. Some Portuguese settlers were of Jewish or Moorish origin but most of them had converted to Christianity. There were also some Dutch immigrants to the Northeast in the sixteenth and seventeenth centuries. The Portuguese intermarried with the Amerindian population, which was decimated by conflict and disease.

During the colonial period, after Indian slavery proved difficult to enforce, the colonists imported hundreds of thousands of slaves from Africa for labor on the sugar plantations, in the mines, and later on coffee plantations. At first, slaves outnumbered the white settlers in many areas, but the balance eventually changed because of their high mortality and low fertility. However, as slavery became economically and politically less feasible after 1850 and the British blocked the slave trade, Italian immigrants began replacing the slaves on coffee plantations in São Paulo. During the same period, settlers from Europe, primarily Germany, Italy, and Poland, established farming colonies in parts of the South.

Brazil's racial mix was made more diverse with the arrival of Japanese and Middle Eastern immigrants in the early twentieth century. At first, the Japanese worked in agriculture in São Paulo and the Amazon, while the Lebanese, Turks, and Syrians became involved in commerce in many parts of the country. During the 1900s, the Japanese descendants, who constitute the largest community of Japanese outside of Japan, except for Hawaii, became primarily urban residents, especially in São Paulo. In the 1970s, intermarriage with non-Japanese became common.

As emphasized by anthropologists such as Gilberto Freyre and Darcy Ribeiro, all the racial and ethnic groups that arrived in Brazil intermingled and intermarried, with few exceptions. This led to increasing mixtures of all possible combinations and degrees. Many individuals are, therefore, difficult to classify in racial terms. Questions on color were included in the demographic censuses of 1940, 1950, 1980, and 1991. Although the answers involved self-classification and may not have been objective, it was clear that the proportion of blacks decreased while that of mulattoes increased. There was a simultaneous process of "whitening." The self-declared proportions in 1991 were 55.3 percent white, 39.3 percent mulatto, 4.9 percent black, and 0.6 percent Asian.

Because of the lack of a clear color distinction and a strong cultural tradition of tolerance and cordiality, as well as longstanding explicit laws against racial discrimination, Brazil has been touted as a "racial democracy." However, "racial democracy" is a myth. There is a very strong correlation between light color and higher income, education, and social status. Few blacks reach positions of wealth, prestige, and power, except in the arts and sports. Although discrimination is usually not explicit, it appears in subtle forms: unwritten rules, unspoken attitudes, references to "good appearance" rather than color, or simply placing higher value on individuals who are white or nearly white.

In the 1960s, black consciousness began to grow, although the very lack of a clear color line in biological or social terms weakened racial solidarity of the nonwhite population. The prevailing notion that Brazil was a "racial democracy" also made it easy to dismiss black movements as un-Brazilian. For the most part, the movements did not press for changes in government policy, which was already officially against racial discrimination. Instead, they emphasized racial pride and the struggle against subtle forms of discrimination and the often covert violence to which blacks were subject.

Estimates of the original Amerindian population of Brazil range from 2 to 5 million at the time of first contact with Europeans in the early sixteenth century. There were hundreds of tribes and languages. Now there are 230 tribes that speak more than ninety languages and 300 dialects.

Because of violence and disease, the original Amerindian population was reduced to about 150,000 by the early twentieth century. In 1910 the Indian Protection Service (Serviço de Proteção aos Indios--SPI) was established. Its leader, Marechal Cândido Rondon, was famous for stating that "one should die, if necessary, but never kill an Indian." In 1968 the National Indian Foundation (Fundação Nacional do índio--Funai) replaced SPI, which was charged with corruption. The Indian Statute went into effect in 1973. The 1988 constitution provides that Indians are entitled to the lands that they traditionally occupy.

Despite the difficulties it faced, the Amerindian population began to recover its numbers and increased to 330,000 by the mid-1990s. In genetic terms, millions of Brazilians have some Amerindian ancestry, usually on the side of their grandmothers or great-grandmothers. The ancestry is especially strong in the Amazon region, where the inhabitants of mixed Indian and white descent are called caboclos . Because of such widespread miscegenation and acculturation, objective definitions of "Indian" are practically impossible in Brazil. The most useful definition, also used for official purposes, is subjective but pragmatic: Indians are those who consider themselves Indians and are considered by others as such. They include groups that are officially classified as isolated, in the process of integration, or integrated (although "integration" involves entry into the lowest ranks of Brazilian society).

Most of the Amerindian population is in the Amazon region, where Amerindian lands account for about 15 percent of the territory. Some of the largest areas were set aside during the Collor administration in 1992. The best known and largest of these is the 9.6-million-hectare Yanomami Indigenous Park, located in the northern states of Amazonas and Roraima, along Brazil's border with Venezuela. Gold miners and their diseases have had an adverse impact on the Yanomami. The Caiapó in southeastern Pará became widely known both for their traditional environmental management and their controversial concessions to gold miners and lumber companies. Other indigenous areas include the Xingu Indigenous Park and other parts of Amazônia, including the western section of the Amazon along the Rio Solimões, Roraima, northern Amazonas, Rondônia, Acre, Amapá, and northern and southeastern Pará. The Northeast (Maranhão) and Center-West (western Mato Grosso, Mato Grosso do Sul, and Goiás) regions also have large indigenous areas.

Some groups in rural Brazil merit special attention. Although there has been massive rural to urban migration in Brazil, nearly 40 million people still live in the countryside, and another 10 million live in towns with a population under 20,000. There are also signs of urban to rural migration as a result of exhaustion of employment and income opportunities in large cities.

Many of the inhabitants of the countryside are rural workers in agriculture, with permanent or, more typically, seasonal employment, particularly in harvesting, an activity in which women and children are also involved. Although a large number of small family farmers have land of their own, millions of rural workers are landless because land tenure is extremely concentrated in Brazil. In the face of slowness of official land reform, they began to invade unproductive properties in the 1990s. As a result of their organization and massacres of their activists in Rondônia and Pará, they entered the political limelight, and land reform was placed high on the political agenda.

In addition to farmers, Brazil has various kinds of traditional populations--including rubber tappers, Brazil nut collectors, caboclos and other traditional riverine dwellers, small fishermen, and others--who became a new social category in the late 1980s. Some of them received land from the government in the form of extractive reserves, meaning land containing valuable natural resources such as rubber-yielding trees, hardwoods, and so forth, ceded to their associations on the condition that they use their natural resources in a sustainable way. For some rural Brazilians, sustainable extraction presents an alternative to rural exodus and structural unemployment.

Brazilian culture was never monolithic. Since the sixteenth century, it has been an amalgamation of traditional Iberian, indigenous, and African values, as well as more recent Western values, developed in northern Europe and the United States, such as equality, democracy, efficiency, and individual rights. At times there are subtle or open conflicts, especially between norms of Mediterranean and Anglo-Saxon origin, or between practices of European versus Amerindian or African origin. However, Brazil is remarkable for the way in which there is unity in cultural diversity. Sometimes the values and practices of different origins have blended with each other, as in the case of Afro-Brazilian religious syncretism or liberation theology (see Glossary).

Another way of reconciling diversity has been the often considerable distance between actual practices, which conform with tradition, and official norms, which generally follow the positivist logic of "order and progress" that underlay the establishment of the republic in 1889. The difference between norms and behavior, or between theory and practice, is a constant throughout Brazilian history. In colonial times and during the empire, imported cultural values and social norms had to be reconciled with the extenuating circumstances and realities of a frontier situation. Getting married officially, for example, was difficult in the absence of priests or because of the high cost of service by the justices of the peace.

In the 1990s, many people ignore laws that are not enforced, or allege that doing the right thing would be fine but that they lack the condições (conditions). The aphorism that sums up a common attitude about doing one's duty is, "Ninguém é de ferro " (No one is made of iron). The relaxed attitude is reinforced by the fact that laws or norms are often seen as having been imposed from the outside, rather than being the result of a social contract established for the common good. Thus, Brazilians, who are known for pragmatism, have become adept at living with idealistic rules, on the one hand, and actual practices that are often quite divergent, on the other. They switch easily between different cultural codes ranging from "traditional" values, such as machismo and paternalism, to "modern" values and social norms that favor women and equality.

Despite regional and social class variations, the Brazilian way of life has common traits that distinguish it from the customary ways of dealing with people and situations in North America and Europe and even in other Latin American countries. Its uniqueness seems to result from the peculiar blend of Portuguese, African, and Amerindian cultural influences in a setting in which central authority attempted, without great success, to exploit the people and resources and to enforce religious norms. Under these circumstances, it was preferable to appear to obey than actually to obey.

Many attempts have been made to explain what makes Brazilians different from their neighbors in the Americas, both North and South. In the late nineteenth century, Joaquim Maria Machado de Assis, one of Brazil's greatest writers, explored the subtleties of the Brazilian character, focusing on the attempts of the urban middle class to emulate European lifestyles and aspirations. In the 1920s, the writer Mário de Andrade, a leader of the modernist movement that broke with tradition and attempted to find an authentic Brazilian identity, created the archetypal Brazilian character, Macunaíma, a lazy but ingenious black-turned-white Amazonian who migrated to São Paulo and was a "man with no character." In the following decade, in books such as The Masters and the Slaves (Casa Grande e Senzala) and The Mansions and the Shanties (Sobrados e Mocambos), Gilberto Freyre emphasized the flexibility of the Portuguese, as well as the African roots of the Northeasterners. Other authors characterized the Brazilian as homem cordial (cordial man). In his novels and stories, João Guimarães Rosa, Brazil's greatest writer of the twentieth century, found universal themes in the contradictory characters and peculiar language of men and women deep in the sertão backlands. Novelist Jorge Amado focused on social conflict, local color, and sensuality in his native Bahia State. More recently, the Brazilian anthropologist Roberto da Matta explored tensions between the private and public spheres, spontaneity, and authority, as well as sentiment and order to which Brazilians have found their own characteristic solutions.

At the level of interpersonal relations, in contrast to what is usually found in Spanish-speaking Latin America, where behavior tends to be more formal and rigid, there are in Brazil strong cultural values in favor of conciliation, tolerance, and cordiality. To the extent possible, direct personal confrontation is avoided. This Brazilian style of behavior may be derived from an Iberian and colonial heritage of diverse ethnic groups living together, weaker central authority exercised by the Portuguese crown, and day-to-day practical forms of resistance to exploitation. It may also have an element of popular emulation of the genteel behavior of the elites. Whatever its origins, Brazilians are known for their informality, good nature, and charm (simpatia ), as well as their desire not to be thought unpleasant or boorish (chato ). They place high value on warmth, spontaneity, and lack of pomp and ceremony.

Though they are cordial and magnanimous at the interpersonal level, Brazilians as a whole are exploitative with regard to the environment. This attitude has been explained in terms of the bandeirante or conquistador mentality by authors such as Viana Moog and Jorge Wilheim. According to this interpretation, the general spirit of the colonizer of yesteryear or today is to accumulate as much wealth as possible as quickly as possible and then move on. Whatever its roots, the result of this kind of behavior is individualism, transience, and disregard for others and for nature as opposed to stability, solidarity, equilibrium, and equity. It has led to both human and environmental degradation.

In a similar fashion, Brazilians tend not to think in terms of the common good. Discourse invoking mutual benefit for all concerned is often mistrusted as a disguised justification for colonialism or exploitation. The result of widespread evasion of rules imposed by the central authority is a vicious circle involving crackdowns and inspections (fiscalização ) to enforce ever-tougher rules and ever more sophisticated and ingenious ways of evading the rules (burla ). This tendency often blocks the efforts of those who are well-intentioned, without creating major obstacles but rather making their work easier for the truly dishonest.

This nonconformity with illegitimate authority is probably an origin of one of Brazil's most characteristic and original concepts, summarized in the word jeito . The word is practically untranslatable but refers to ways of "cutting red tape," "bending the rules," "looking the other way," or an alternative "way out." In its worst form, it amounts to corruption. At its best, it means finding pragmatic solutions to difficult problems without making waves.

Many Brazilians regard soccer and Carnaval, for which Brazil is famous, as outlets for the frustrations of everyday life. Brazil's three world soccer championships led to great national pride until 1970; subsequent losses caused twenty-four years of frustration until the fourth World Cup was brought home in 1994. The yearly Carnaval festivities provide for short-lived release and relaxation.

Another form of release is through imported and native music, widely disseminated by modern communications. The bossa nova of the 1960s was replaced by the lively Brazilian rhythms and dance movement of forró , lambada , and pagode .

Brazil - Language

Language is one of the strongest elements of Brazil's national unity. Portuguese is spoken by nearly 100 percent of the population. The only exceptions are some members of Amerindian groups and pockets of immigrants, primarily from Japan and South Korea, who have not yet learned Portuguese. The principal families of Indian languages are Tupí, Arawak, Carib, and Gê.

Under the military governments in the 1970s, Brazil's state-owned system of telecommunications became highly developed. The telephone system was modernized by means of massive government investments. Long-distance and international calls, which had been difficult to make and hear until then, were made accessible through direct dialing, at least to those who could afford the high price of telephone lines. The Postal and Telegraph Company (Empresa de Correios e Telégrafos--ECT) also became a model of efficiency. Some of the quality of telephone and postal services was lost in the 1980s and early 1990s.

The development of telecommunications in Brazil was originally part of a strategy of modernization with centralized control. However, the widespread flow of information contributed to democratization of society in the 1980s and 1990s, a process in which the uncensored press played a key role. Censorship imposed during the military regime was lifted during the Figueiredo administration. The press is owned by private enterprises, none of which can be owned or controlled by foreigners; it includes dozens of daily newspapers, several weekly magazines, and a myriad of other periodical publications.

Radio and television stations are licensed to private businesses owned by Brazilians. There are hundreds of radio stations all over the country. Television became widespread in the 1970s, with several national networks and numerous local stations in all states. Television sets are common even in low-income households. Soap operas (telenovelas ) are widely watched and are a common topic of conversation. It is a sign of their high technical quality that these programs have been sold to countries all over the world. The news programs often include editorial comment. In the authoritarian period, this expression of opinion, sometimes in subtle ways, tended to support government. In the 1990s, it has contributed to clearer notions of good government and citizens' rights among strata that had not developed political consciousness, but it may also have contributed to disillusionment.

Brazil - Family and Kinship

The Portuguese crown and ecclesiastical authorities in Brazil were not entirely successful in implanting their ideals with regard to marriage and the patriarchal family. Brazilians have limited enthusiasm for official norms and often resort to consensual unions, marital dissolution, serial unions, and what the Roman Catholic Church generally considers to be lax standards of behavior.

At the same time that many of them bend the rules, Brazilians place high value on family and kinship relations. These are especially valued in an environment in which authorities, on the one hand, and one's subordinates, on the other, are thought to be untrustworthy. Most Brazilians are genuinely fond of children and are attached to their parents, and they cultivate a wide circle of aunts, uncles, and cousins. In the past, relationships with godchildren, godparents, and ritual co-parents extended these networks, but they are losing their importance in modern urban society.

Marital separation and divorce as well as formal and informal remarriage are now commonplace. Women commonly head their own households, and families often include children from different marriages or unions. The new arrangements are socially accepted but have not become culturally institutionalized in the sense of devising new terminology for the various relationships.

Brazil - Roman Catholicism

Brazil's strong Roman Catholic heritage can be traced to the Iberian missionary zeal, with the fifteenth-century goal of spreading Christianity to the infidels. In the New World, these included both Amerindians and African slaves. In addition to conversion, there were also strong efforts to enforce compliance with Roman Catholicism, including the Inquisition, which was not established formally in Brazil but nonetheless functioned widely in the colonies. In the late nineteenth century, the original Roman Catholic populace of Iberian origin was reinforced by a large number of Italian Catholics who immigrated to Brazil, as well as some Polish and German Catholic immigrants.

According to all the constitutions of the republican period, there is no state or official religion. In practice, however, separation of church and state is weak. Government officials generally avoid taking action that may offend the church.

Brazil is said to be the largest Roman Catholic country in the world. In 1996 about 76 percent of the population, or about 122 million people, declared Roman Catholicism as their religion, as compared with 89 percent in 1980. The decline may have resulted from a combination of a real loss of influence and a tendency to be more objective in answering census questions about religion.

As in most dominant religions, there is some distance between nominal and practicing Catholics. Brazilians usually are baptized and married in the Roman Catholic Church. However, according to the CNBB (National Conference of Brazilian Bishops), only 20 percent of nominal Catholics attend Mass and participate in church activities, but the figure may be as low as 10 percent. Women attend Mass more often than men, and the elderly are more active in church than the young. In the 1990s, charismatic forms of Catholicism used unconventional approaches, along the line of those used by Pentecostal Protestant groups, to attempt revitalization and increase active participation.

Popular or traditional forms of Catholicism are widespread in the interior of the country. Many Brazilians pray to figures such as Padre Cícero (a revered priest who lived in Ceará from 1844 to 1934), make pilgrimages to the site of the appearance of Brazil's patron saint, our Lady of the Appearance (Nossa Senhora Aparecida), and participate in traditional popular rites and festivities, such as the Círio in Belém and the Festa do Divino in central Brazil. Some use expressions of religious origin, such as asking for a blessing on meeting someone older or responding "God willing" (Se Deusquiser ) when someone says "See you tomorrow."

Syncretism, the combination of different forms of belief or practice, has been widespread in Brazil, where Roman Catholicism has blended with numerous Afro-Brazilian cults. Syncretism occurred partly because of religious persecution and partly because of the compatibility of the different belief systems. The most well-known and socially acceptable combinations are called umbanda or candomblé . At one extreme, umbanda blends in with Kardecian spiritualism (see Glossary). At the other extreme, there is a kind of black magic called macumba , which can be used for either good or evil purposes. Its practitioners leave offerings of chicken, rum (cachaça ), flowers, and candles at crossroads, beaches, and other public places. Kardecian spiritists, as well as Mormons, Jehovah's Witnesses, Jews, and Buddhists, together account for about 3 to 5 percent of the population, while those declaring that they have no religion total 15 percent.

In recent decades, Protestantism has grown rapidly. The proportion of the population considered evangelical grew from 3.7 percent in 1960 to 6.6 percent in 1980. The 1991 census showed a proportion of 19.2 percent, or 28.2 million followers. Nearly half of Brazil's evangelicals, or 13 million, belong to the Assembly of God. This and other evangelical or Pentecostal varieties of Protestantism--Christian Congregation, Universal Church of the Kingdom of God, Quadrangular Evangelicals, Brazil for Christ, and God and Love--emphasize brotherhood and religious ceremonies that actively engage participants in song and chants. The groups that have grown the most are fundamentalists with strict standards of personal behavior regarding dress, drinking, smoking, and gambling. They have special appeal among recent migrants to urban areas or to the frontier, who have had to adapt to new and difficult circumstances. In contrast to the formality and central control of the Roman Catholic Church, the fundamentalist Protestant groups grow rapidly and split and multiply frequently.

In 1996 the United Nations Development Programme (UNDP), which worked together with the Applied Economic Research Institute (Instituto de Pesquisa Econômica Aplicada--IPEA), released its Human Development Report 1995 for Brazil. Using an index based on income, education, infant mortality, and other socioeconomic indicators, the report showed that Brazil was in a medium human development position as compared with other countries. It suggested that the national territory could be divided into three parts, with standards of living similar to those found in Belgium (the South and Southeast), Bulgaria (Center-West and North), and India (Northeast).

As in the Human Development Report 1995 , infant mortality rates (deaths of children less than one year of age per 1,000 live births) often are used as indicators of living conditions. Since the denominator is births, they are not affected by the population's age structure. Because of underreporting of vital statistics, they must be estimated from census data. The overall average infant mortality rate for Brazil declined from 117 per 1,000 live births to eighty-eight, according to the 1960 and 1980 censuses, respectively. The 1991 census showed that the rate dropped to 49.7 in 1991. In 1995 the estimated rate was 44.4 per 1,000 live births.

As usual, national averages mask wide regional and socioeconomic variations. As in previous decades, infant mortality levels in 1995 were lowest in the South, at 21.1, and highest in the Northeast, where they reached 70.2, more than three times higher. In recent decades, infant mortality generally has been higher in rural areas, except for the poorest urban strata, whose mortality has been higher. State infant mortality rates fluctuate from year to year, depending on economic and public health conditions.

The sharp drop in infant mortality in recent decades did not necessarily reflect a commensurate general improvement in living conditions. To a large extent, the drop was the result of both the decline in fertility, which decreases the risk of infant deaths for biological and socioeconomic reasons, and specific health and sanitation interventions, primarily use of oral rehydration and extension of piped water.

Brazil - Infectious and Chronic Diseases

Perinatal conditions were responsible for 47.1 percent of total infant mortality, ranking first among the causes of reported deaths for those under one year old in 1988. The leading cause of mortality among children one to four years of age, at 24.5 percent of all deaths in 1988, was infectious and parasitic diseases, particularly diarrheal diseases. External causes, specifically traffic accidents and homicide, accounted for the greatest share of registered deaths for the cohort aged five to forty-nine. Among the elderly population sixty years and above, deaths resulting from diseases of the circulatory system amounted to the highest percentage (50.3) of the total in 1989. Those diseases were also the leading cause of mortality for the entire nation, with higher ratios in the wealthier Southeast (36.2 percent) and South (37.2 percent), relative to the impoverished North (23.2 percent) and Northeast (29.3 percent). Although the proportion of deaths has shifted to older population groups, regional variations continue to hold, such that over a quarter of deaths afflicts the below-five age range in the North.

Expanded immunization coverage in recent years has favored a drop in mortality ascribed to vaccine-preventable diseases, from 12.9 percent in 1979 to 2.4 percent in 1988. In 1993 vaccination of Brazilian children less than one year old under the National Immunization Program reached 68.5 percent for diphtheria, pertussis, and tetanus, 92.3 percent poliomyelitis, 77.7 percent measles, and 98 percent tuberculosis. Although tuberculosis persists as a principal source of morbidity and mortality, particularly with the onset of the human immunodeficiency virus (HIV), its incidence and death rates have been steadily on the decline.

Control measures have proven effective in reducing the prevalence and outbreak of other infectious and endemic diseases, including cholera, Chagas' disease (American trypanosomiasis), yellow fever, and schistosomiasis (bilharzia). However, the number of registered cases of malaria, which 42.9 percent of the Brazilian population is at risk of contracting (mainly in the Amazon region), grew from 52,000 cases per year in 1970 to about 600,000 in the 1980s, with some improvement since then. Other communicable diseases either have been reintroduced, as in the case of dengue (breakbone fever) since 1986. Infectious tropical diseases reflect poor sanitary conditions as well as discrepancies in the standard of living between Northern and Southern Brazil, where such diseases ranked third and last, respectively, among the six leading causes of death in 1989.

Leprosy remains a serious problem in Brazil's high poverty areas, where the disease is spreading most rapidly. In October 1996, an average of 100 new cases were being reported each day. As many as half a million Brazilians are afflicted with leprosy.

The incidence of acquired immune deficiency syndrome (AIDS) in Brazil has also reached epidemic proportions, from 490 in 1985 to 103,262 cumulative cases by March 1, 1997, the fourth highest reported prevalence in the world. Based on 1996 data from the Pan American Health Organization (PAHO), homosexuals and/or bisexuals constitute 45 percent of the cumulative cases; intravenous drug users, 27 percent; heterosexuals, 20 percent; and others, 8 percent. The incidence was highest among young adults; 60 percent of those suffering from AIDS in 1994 were in the twenty-five to thirty-nine age-group. What began as a disease of homosexuals and recipients of blood transfusions quickly spread to heterosexuals and intravenous drug users. HIV infection attributed to needle-sharing during drug use increased from 3.0 percent of the cases in 1986 to 24.5 percent in 1992-93 and from 5.0 percent to 23.4 percent for heterosexual transmission, altering the male-to-female ratio from 100:1 in the 1980s to 4:1 in 1994. The surge in the proportion of women contracting the virus has resulted in part from a rise in perinatal transmission, the predominant mode of infection for the 12,000 infants and children diagnosed with AIDS in 1994.

The overall reduction in the number of new cases of the above infectious diseases, on the one hand, and the conspicuous rise in the incidence of chronic and degenerative diseases, on the other, indicate the occurrence of an epidemiological transition in Brazil. However, the transition is not complete; the two types coexist as major causes of death. Diseases of the circulatory system, including cerebrovascular and heart diseases, currently claim first place as the leading cause of death among the entire population (34.3 percent in 1989). The degenerative diseases have contributed to steep rises in the cost of health care, especially for the elderly.

Brazil - Nutrition and Diet

Inadequate nutrition serves as a risk factor for morbidity and mortality from infectious diseases. Diarrheal and respiratory diseases, measles, tuberculosis, and malaria are the principal causes of death for malnourished children. The prevalence of malnutrition resulting from insufficient protein-energy diets among children under five years in Brazil in 1990 was 13.0 percent. Nevertheless, malnutrition within this age-group dropped substantially (61.4 percent) during the years 1975-88. Chronic malnutrition in 1989 characterized 15.4 percent of the entire population. The Northeast suffered from a greater rate of chronic malnutrition (27.3 percent) than the South (8.1 percent). The indigenous population's rate was twice that of low-income groups.

Improvement in nutrition has been accompanied by changes in the typical Brazilian diet. The staples of the traditional diet in Brazil are rice and beans, supplemented by whatever meat may be available, and few, if any, green vegetables. In the Amazon region, the staple carbohydrate is manioc meal, usually eaten with fish. Bread and pasta have become important parts of the diet of low-income families, especially in urban areas, because of government subsidies for wheat. Advances in poultry-raising have led to lower prices and greater consumption of chicken and eggs as sources of protein. Urban and rural workers often take their home-made rice and bean lunches to work, although this practice in urban areas is being replaced by employer-provided meal tickets for use in restaurants or luncheonettes, including fast-food outlets.

Brazil - The Health Care System

The constitution of 1988 and the Organic Health Law (Lei Orgânica de Saúde) of 1990 universalized access to medical care, unified the public health system supported by the Ministry of Health and the National Institute for Medical Assistance and Social Security (Instituto Nacional de Assistência Médica da Previdência Social--INAMPS), and decentralized the management and organization of health services from the federal to the state and, especially, municipal level. Between 1985 and 1990, for example, the proportion of program funds managed by municipalities increased from 10 to 15 percent and by states from 23 to 33 percent. The sweeping health reforms that were initiated in the 1980s attempted to extend coverage to those outside the social security system.

The constitution grants all Brazilian citizens the right to procure free medical assistance from public as well as private providers reimbursed by the government. While the public domain oversees basic and preventive health care, the private nonprofit and for-profit health care sector delivers the bulk of medical services, including government-subsidized inpatient care (that is, private facilities owned 71 percent of hospital beds designated for government-funded health care in 1993). This publicly financed, privately provided health system continues to intensify its focus on high-cost curative care, driving hospital costs up by 70 percent during the 1980s.

Therapeutic treatment in hospitals tends to dominate funding at the expense of health promotion and disease prevention programs. Hospital-based assistance expanded from 44 percent (1985) to 77 percent (1990) of municipal health spending, while expenses for primary care decreased from 35 to 3 percent. Not only have basic and preventive health services for the entire population diminished, but the public health system also subsidizes expensive, high-technology medical procedures that consume 30 to 40 percent of health resources and often end up being used to attend affluent segments of the population. Despite an augmentation in hospital coverage, discrepancies in access and quality of health care among the five regions characterize the Single Health System (Sistema Único de Saúde--SUS); medical consultations average 1.3 per capita in the Northeast versus 2.3 in the Southeast.

Although states and municipalities rapidly acquired more responsibility in administering health funds and facilities, the federal government retained the role of financing public health outlays. As stipulated by the 1988 constitution, government subsidies for health services are derived from the social security budget, which is predominantly based on earmarked taxes and contributions from employee payroll and business profits. The federal government consistently underwrote over three-quarters of all public spending on health in the 1980s, a sizable portion of which remunerated private medical charges. The percentage of total central government spending on health in 1990 was 6.7. Public health expenditures as a share of gross domestic product (GDP--see Glossary) in 1990 ranged from 2.1 to 3.1 percent, close to half of the total health expenditures of 5.8 percent.

Private sources finance the other half of total health expenditures. Perceptions of inefficiency in the government reimbursement schedule and deterioration in service quality of the public health system spurred a rapid growth in the private financing of health care during the 1980s, particularly in well-developed cities of the Southeast. The private sector covers 32 million citizens (roughly 20 percent of the Brazilian population) and consists of several hundred firms offering four principal types of medical plans: private health insurance, prepaid group practice, medical cooperatives, and company health plans. The group medical plans rank Brazil as the largest health maintenance organization (HMO) provider in Latin America; HMOs both finance and provide health care, but limit coverage to low-cost procedures and drive the burden of treating high-risk individuals to the publicly funded health system.

Brazil - Health Professionals and Resources

Paralleling private insurance, human resources are disproportionately distributed in Brazil, with overrepresentation in the wealthy states. A strong demand for physicians persists in the Amazon region, while 61.5 percent of doctors are located in the Southeast. Physicians also dominate the health field, comprising 46.8 percent of the work force and serving an average of 847 people per doctor between 1988 and 1991, while nurses (one for every 3,448 people) and other auxiliary personnel lag behind in supply.

Although most health establishments belong to the public sector (65.2 percent public and 34.8 percent private), more private institutions (43.2 percent) provide inpatient care than public (6.8 percent). These establishments range from federal, state, municipal, and university hospitals and health posts to private clinics. The distribution of hospitals and outpatient facilities favors the South and Southeast, at levels two to four times higher per capita than in the North and Northeast, where health conditions are more precarious and the need for health care is greater. The ratio of hospital beds per 1,000 population has remained fairly constant between 1985 (3.9) and 1990 (3.6), and is 33 percent higher than predicted in relation to Brazil's gross national product (GNP--see Glossary).

Brazil has adopted new medical technologies from industrialized countries. However, specialized and high-technology services benefit a minority of privileged patients. Many poor Brazilians, unable to afford hospital-based medical care, rely on both prescription and nonprescription medication to relieve their ailments. The national pharmaceutical market in 1990 was valued at close to US$4 billion, 70.5 percent of which was earned by commercial pharmacies. Judging from the disproportionate availability of drugs and medical equipment to different income groups, universal and equitable access to health care remains a goal to be reached.

Brazil - Public Health and Welfare

The Ministry of Social Security, now separate from the Brazilian health system as discussed above, carries out the conventional mandate of ensuring old-age assistance. Until the 1940s, social security was limited to private plans organized by employers and employees. Over time, the components of the system became increasingly integrated and controlled by the federal government. More recently, health benefits and social security have become nearly universal, no longer depending on formal employment and contributions. Retirement and disability benefits are pegged to the official minimum wage. They weigh so heavily on government spending that they are one of the reasons the government resists raising the minimum wage for the active work force. At the same time, the middle class considers these benefits insufficient and, therefore, seeks private social security plans or makes investments in real estate, given the instability of financial markets in Brazil. The social security system will face even greater challenges as the age structure of the population changes, with a greater number of pensioners in relation to the number of contributing workers.

The National Sanitation Plan (Plano Nacional de Saneamento--Planasa) of the 1970s did not keep pace with rapid urbanization in the development of safe drinking water supplies and waste disposal systems, particularly evident in the precarious metropolitan peripheries and favelas. Between 1988 and 1993, 87 percent had access to piped water and 72 percent to sewerage and waste disposal services, yet a 1989 study by the IBGE (Brazilian Geography and Statistics Institute) revealed that 92 percent of the municipalities did not treat domestic wastewater and only 27.6 percent of dwellings in a Northeast metropolis were linked to a sewerage system that passed quality standards.

The rural population receives far fewer water and sanitation services than its urban counterparts. Ninety-five percent of those in urban areas had adequate water supply during the 1988-93 period, as compared with 61 percent of rural dwellers; the levels for disposal systems were 84 percent and 32 percent, respectively (the rural figures refer to wells and privies, not service). To a certain extent, the urban-rural incongruity in the provision of environmental sanitation accounts for the higher percentage of deaths from diarrheal diseases in the rural North and Northeast than in the urban areas. The lack or deficiency of basic sanitation services has been associated with the persistence of diarrhea as well as outbreaks of contagious diseases, including cholera.

The National Housing Bank (Banco Nacional de Habitação--BNH) was established in the 1960s to finance public housing using funds from savings accounts and from the official employment guarantee system, known as the Severance Pay Fund (Fundo de Garantia do Tempo de Serviço--FGTS). Many thousands of basic houses (casas populares ) were built, usually in projects at the edges or outside of cities. Because of the financial constraints of working with a low-income clientele, the federal Housing Finance System (Sistema Financeiro de Habitação--SFH) has been used primarily to provide low-cost mortgages for houses and apartments for the middle class.

Many poor people, without access to financing, find it necessary to build their own houses. The favelas on the hills of Rio de Janeiro are one well-known type. In other parts of Brazil, shantytowns on stilts are built over water (alagados ), or in marshy areas (baixadas ). In 1991 there were 3,221 medium- to large-size favelas (each with more than fifty-one households), which contained 2.9 percent of the country's households. The largest favelas, such as Rocinha in Rio de Janeiro, are home to hundreds of thousands.

Brazil - Education

As in other areas of social life, education in Brazil is marked by great inequalities, with a highly developed university system at one extreme and widespread illiteracy at the other. Despite considerable progress in coverage, serious problems of quality remain. In 1995 the federal government was spending almost twice as much on the universities as on basic education, which is the primary responsibility of states and municipalities. Local governments often paid teachers wages that were well below the legal minimum.

In 1990 there were 37.6 million students, as compared with 10 million in 1964. Of the 1990 total, 3.9 million students were in preschool, 29.4 million in elementary school, 3.7 million in secondary school, and 1.7 million in university. Despite this progress, less than 40 percent of the high school-age population was enrolled in school.

Because of the economic and social changes that have occurred in Brazil in recent decades, parents now place high value on education for their children. Availability of schools has become an important factor in deciding where to live and how to make a living, even in how many children to have.

Brazil - Literacy

In 1990 it was estimated that 81 percent of the total population above age fifteen was literate, or 19 percent illiterate (based on the inability to sign one's own name). The level of functional illiteracy--that is, the inability to read newspapers and write letters--was not measured but was certainly much higher (an estimated 60 percent). As with most social indicators, illiteracy is highest in rural areas of the Northeast and North, where the figures are comparable to those in Africa, and lowest in urban areas of the Southeast and South, where the figures are comparable with those in the developed world. For example, southern towns had an adult illiteracy rate of only 10 percent in 1991, while the rate for children between the ages of eleven and fourteen was only 3 percent.

Literacy is strongly associated with income. When the population is divided into five income strata, illiteracy is ten times greater in the stratum with the lowest income. The illiteracy rate rises by age- group. The 1991 census also showed a strong racial gradient, with illiteracy levels of 11.6 percent among whites, 27.4 percent among mulattoes, and 29.9 percent among blacks. Differences by gender were not strong. Because of disappointing results when the federal government undertook a nationwide adult literacy campaign, the Brazilian Literacy Movement (Movimento Brasileiro de Alfabetização--Mobral), the emphasis shifted in the 1960s and 1970s to reaching children through the school system.

Brazil - Primary and Secondary Schools

In theory, public education is free at all levels in Brazil and is compulsory for ages seven to fourteen, but coverage is incomplete and quality uneven. Private schools continue to meet a large part of the demand of those who can afford to pay. Generally speaking, the private primary and secondary schools are for the upper and middle classes, while the public schools at these levels are attended by those in the lower socioeconomic strata. During the 1990s, rising costs and economic pressures made it necessary for some of the middle class to shift from private to public schools.

The system of primary and secondary schools was restructured during the 1970s and 1980s to consist of eight years of basic ("fundamental") education and three years of secondary school. The public schools at these levels are run by municipalities and states. In 1990 the Collor government adopted a system of integrated educational centers, which included day care, school lunches, and health care, called Integrated Centers for Assistance to Children (Centros Integrados de Assistência à Criança--CIACs) and later renamed Centers for Comprehensive Attention to Children (Centros de Atenção Integrada à Criança--CAICs). These centers were based on the model developed in Rio de Janeiro State by the administration of Leonel de Moura Brizola, then governor of the state. However, because of limited funds they could not be implemented throughout the country, and the validity of concentrating resources on a small number of beneficiaries was questioned.

Between 1960 and 1990, enrollment rates for school-age children (seven to fourteen) increased from 50 percent to 90 percent for the country as a whole. They varied considerably from one region or state to another and within regions and states. Coverage was highest in the Southeast and South and lowest in the Northeast. There were also racial differences. According to 1985 data, 91.4 percent of white children ages seven to nine were in school, as compared with only 74.6 percent of black children of those ages.

One of the biggest educational problems in Brazil is school nonattendance. In wealthy states, 95 percent of children enroll from the start, while only 65 percent to 80 percent enroll in poor states. Approximately 25 percent drop out by the second year. UNICEF reported in mid-1994 that Brazil is in last place in a world ranking that compares the per capita income of each country with the rates of school nonattendance or absenteeism in the first five grades. Given Brazil's considerable economic strength, one would expect at least 80 percent of the children to complete the fifth grade, but only 39 percent finish, according to the UNICEF report. Often children from poor families start working from the age of ten in order to help their parents. Other reasons for school nonattendance include inadequate school facilities, the high examination failure rate, and malnutrition.

One of the government initiatives at the national level that has improved attendance and nutrition is the school lunch program. Some local governments, such as that of the Federal District, have experimented with providing payments to poor families of children who stay in school.

Brazil - Colleges and Universities

The system of colleges and universities expanded rapidly in the 1970s and 1980s, reaching a total of 893 in 1993. Of these, ninety-nine were universities and 794 were isolated colleges or schools. Nearly all states have federal universities. The state universities are less widespread, while the few municipal universities or colleges are concentrated in large cities in the Southeast and South. The Southeast Region has nearly two-thirds of the country's colleges and universities. The number of undergraduate students admitted in Brazil in 1990 was 407,148, of which 14.1 percent were in federal universities, 10.9 percent in state universities, 5.9 percent in municipal universities, and 69.0 percent in private institutions. The total number of students enrolled was about 1.5 million, and the number of graduates was 230,000.

The best universities in Brazil generally include the University of São Paulo (Universidade de São Paulo--USP), the Campinas State University (Universidade Estadual de Campinas--Unicamp), the Federal University of Rio de Janeiro (Universidade Federal do Rio de Janeiro--UFRJ), the University of Brasília (Universidade de Brasília--UnB), and the Federal University of Minas Gerais (Universidade Federal de Minas Gerais--UFMG), all of which are public. The private Pontifical Catholic University of Rio de Janeiro (Pontifícia Universidade Católica do Rio de Janeiro--PUC-RJ) is also highly ranked. Public universities are free and do not charge tuition. Private colleges and universities, which charge tuition, grew very rapidly during the 1970s to meet the enormous demands of a growing middle class.

Because of the great demand for higher education and the limited resources, both public and private colleges (faculdades ) and universities in Brazil require an entrance examination (vestibular ). Passing these examinations often necessitates private college-preparatory courses, which only the upper and middle socioeconomic strata can afford. On completion of a full academic course of study, university students may obtain a bachelor's degree (bacharelado ) and may also study an additional year to receive a teaching degree (licenciatura ).

The choice of majors or specialties is not well-aligned with the job market. According to a 1993 IPEA study, two out of three students were in the social sciences or humanities, as opposed to scientific or technical fields. The study also concluded that four out of ten students dropped out before graduation and that those who graduated took an average of eight years to finish. Many of these had difficulty paying for tuition, or living expenses, and many who gave up before graduation realized that they were not being well prepared for the job market (see Research and Development, ch. 6).

Graduate study grew rapidly during the 1970s and 1980s. In 1991 Brazil had 973 master's programs in almost all areas, with 39,401 students, as well as 465 doctoral programs with 12,862 students. Because of this growth, along with budget constraints, the government restricted fellowships for university study abroad, which had made it possible for about 20,000 Brazilians to obtain their advanced degrees in the United States and Europe.

Brazil - Social Conflict and Participation

While avoiding open conflict, Brazilian society has gone through transitions that in general have moved in the direction of modernization and democracy. Considering the decimation of Indian populations and the maintenance of African slavery long after it had been abolished elsewhere in the Americas, Brazil's colonial and imperial history was characterized by violence. At the same time, however, there is a strong Brazilian tradition of nonviolent resolution of conflicts. There was no war of independence against Portugal, but only local or regional conflicts, such as the Cabanagem (1835) in the Amazon, the War of the Farrapos (1845) in Rio Grande do Sul, and the São Paulo Civil War (1932) (see The Empire, 1822-89; The Republican Era, 1889-1985, ch. 1). Although Brazil participated in the Paraguayan War, also known as the War of the Triple Alliance (1864-70), most conflicts with neighboring countries were solved peacefully. The transition from empire to republic in 1889 was also relatively smooth. There was no generalized civil war, but there were isolated events, such as the resistance of a millenarian group at Canudos in the Northeast, described in Euclydes da Cunha's classic Os sertões , translated as Rebellion in the Backlands . In contrast to Spanish America, which fought protracted revolutionary wars and split into many separate countries, Portuguese America held together in one huge country. Although there were many violent episodes, Brazilian history, on the whole, has been remarkably peaceful.

Despite its nonbelligerent heritage at the national level, Brazilian life is marked by considerable violence on a day-to-day basis. Indians and slaves, or their descendants, have always been victimized. The rural bandits (cangaceiros ) of the Northeast, of whom Lampião is the most famous, battled rival groups and backlands colonels in the early 1900s. In the post-World War II period, the struggle for land pitted rural workers and their leaders against the landowners and their hired gunmen, resulting in the murder of leaders and even priests, most notably in frontier areas. Chico Mendes, a rubber-tapper leader killed in Acre in 1988, was the most widely known among hundreds of victims. In 1995 and 1996, there were massacres of landless workers in Rondônia and Pará. In urban areas, especially the largest, violence has become commonplace, with frequent thefts, robberies, break-ins, assaults, and kidnappings. The police themselves are sometimes involved in criminal activities. In Rio de Janeiro, the government has little control over the favelas, which are dominated by gangs that control informal gambling (a numbers game called jogo do bicho ) and drug trafficking as well as influence local politics.

FROM PORTUGAL'S DISCOVERY of Brazil in 1500 until the late 1930s, the Brazilian economy relied on the production of primary products (see Glossary) for exports. Portugal subjected Brazil to a sternly enforced colonial pact, or imperial mercantile policy, which for three centuries heavily curbed development. The colonial phase left strong imprints on the country's economy and society, lasting long after independence in 1822. Measurable changes began occurring only late in the eighteenth century, when slavery was eliminated and wage labor was adopted. Important structural transformations began only in the 1930s, when the first steps were taken to change Brazil into a modern, semi-industrialized economy.

These transformations were particularly intense between 1950 and 1981, when the growth rates of the economy remained quite high and a diversified manufacturing base was established. However, since the early 1980s the economy has experienced substantial difficulties, including slow growth and stagnation. Nevertheless, Brazil still has the potential to regain its former dynamism. In the mid-1990s, it had a large and quite diversified economy, but one with considerable structural, as well as short-term, problems.

Socioeconomic transformation took place rapidly after World War II. In the 1940s, only 31.3 percent of Brazil's 41.2 million inhabitants resided in towns and cities; by 1991, of the country's 146.9 million inhabitants 75.5 percent lived in cities, and Brazil had two of the world's largest metropolitan centers--São Paulo and Rio de Janeiro. The rate of population growth decreased from about 3 percent annually in the 1950s and 1960s to 1.9 percent annually in the 1980-91 period, indicating that Brazil was in a demographic transition. By mid-1997 Brazil had an estimated population of 159.9 million.

Portugal's exploitation of Brazil stemmed from the European commercial expansion of the fifteenth and sixteenth centuries (see The Colonial Era, 1500-1815, ch. 1). Blocked from the lucrative hinterland trade with the Far East, which was dominated by Italian cities, Portugal began in the early fifteenth century to search for other routes to the sources of goods valued in European markets. Portugal discovered the maritime passage to the East Indies around the southern tip of Africa and established a network of trade outposts throughout Africa and Asia. After the discovery of America, it competed with Spain in occupying the New World (see the Indigenous Population, ch. 1).

Initially, the Portuguese did not find mineral riches in their American colony, but they never lost the hope of someday finding such riches there. Meanwhile, in order to settle and defend the colony from European intruders, the Portuguese established a pioneer colonial enterprise: the production of sugar in the Northeast. Beginning in about 1531, cattle began arriving in Brazil, and a cattle industry developed rapidly in response to the needs of the sugar industry for transportation and food for workers. The discovery of precious metals in the colony's Center-South (Centro-Sul), a relatively undefined region encompassing the present-day Southeast (Sudeste) and South (Sul) regions, came only in the eighteenth century.

Brazil - The Economy - The Sugar Cycle, 1540-1640

By the mid-sixteenth century, Portugal had succeeded in establishing a sugar economy in parts of the colony's northeastern coast. Sugar production, the first large-scale colonial agricultural enterprise, was made possible by a series of favorable conditions. Portugal had the agricultural and manufacturing know-how from its Atlantic islands and manufactured its own equipment for extracting sugar from sugarcane. Furthermore, being involved in the African slave trade, it had access to the necessary manpower. Finally, Portugal relied on the commercial skills of the Dutch and financing from Holland to enable a rapid penetration of sugar in Europe's markets.

Until the early seventeenth century, the Portuguese and the Dutch held a virtual monopoly on sugar exports to Europe. However, between 1580 and 1640 Portugal was incorporated into Spain, a country at war with Holland. The Dutch occupied Brazil's sugar area in the Northeast from 1630 to 1654, establishing direct control of the world's sugar supply. When the Dutch were driven out in 1654, they had acquired the technical and organizational know-how for sugar production. Their involvement in the expansion of sugar in the Caribbean contributed to the downfall of the Portuguese monopoly.

The Caribbean sugar boom brought about a steady decline in world sugar prices. Unable to compete, Brazilian sugar exports, which had peaked by the mid-seventeenth century, declined sharply. Between the fourth quarter of the seventeenth century and the early eighteenth century, Portugal had difficulties in maintaining its American colony. The downfall of sugar revealed a fragile colonial economy, which had no commodity to replace sugar. Paradoxically, however, the period of stagnation induced the settlement of substantial portions of the colony's territory. With the decline of sugar, the cattle sector, which had evolved to supply the sugar economy with animals for transport, meat, and hides, assimilated part of the resources made idle, becoming a subsistence economy. Because of extensive cattle production methods, large areas in the colony's interior were settled.

Realizing that it could maintain Brazil only if precious minerals were discovered, Portugal increased its exploratory efforts in the late seventeenth century. As a result, early in the eighteenth century gold and other precious minerals were found. The largest concentration of this gold was in the Southeastern Highlands, mainly in what is now Minas Gerais State.

Brazil - The Economy - The Eighteenth-Century Gold Rush

As a result of the mineral discoveries, settlers flocked to the gold region, and growing numbers of slaves were transferred from the sugar areas and brought in from Africa. Gold mining was mainly alluvial panning, a labor-intensive activity. The extraction of gold increased rapidly until the 1750s when gold exports peaked. After the gold deposits became depleted and exports declined sharply in the last quarter of the eighteenth century, the Brazilian economy entered another long period of stagnation.

The gold surge did not establish a basis for economic expansion after the depletion of the mines. The economic regression was especially bad because of the restrictions Portugal had imposed on the establishment of manufacturing in the colony. However, the gold rush had an important impact in shaping Brazil's territory. First, the various exploratory expeditions led to the incorporation of large areas originally belonging to Spain. In addition, the demand for food and animals for transportation and meat had major repercussions outside the mining region. The mines were located in inhospitable, mountainous terrain, and the movement of goods to and from the mines depended heavily on mules. Agricultural activities were expanded elsewhere in order to feed the miners. Thus, the gold rush brought about the occupation of, and interaction among, different geographical areas. Moreover, the colony's economic and administrative center of gravity moved to the Southeast Region. Gold was shipped through ports in or near Rio de Janeiro, prompting the transfer of the colonial administration from the Bahian town of Salvador to Rio de Janeiro.

The difficult period resulting from the depletion of the mines lasted well into the second quarter of the nineteenth century. The mainstays of the economy were in decline, and the colony fell into a state of depression and decadence. In the late eighteenth century, Brazil experienced a brief surge in cotton exports to Britain, as the War of Independence in America disrupted American trade temporarily; however, Brazilian cotton lost its place in the world market by the early nineteenth century.

Brazil - The Economy at Independence, 1822

Despite Brazil's economic troubles, the early nineteenth century was a period of change. First, the Napoleonic Wars forced the Portuguese royal family to flee to Brazil in 1808, and for a short period the colony became the seat of the Portuguese empire (see The Kingdom of Portugal and Brazil, 1808-21, ch. 1). Moreover, in 1808 Britain persuaded Portugal to open the colony to trade with the rest of the world, and Portugal rescinded its prohibition against manufacturing. These events paved the way for Brazil's independence on September 7, 1822.

Brazil's early years as an independent nation were extremely difficult. Exports remained low, and the domestic economy was depressed. The only segment that expanded was the subsistence economy. Resources (land, slaves, and transport animals) made idle by the decline of the export economy were absorbed into mostly self-consumption activities.

Brazil - The Coffee Economy, 1840-1930

The impact of coffee on the Brazilian economy was much stronger than that of sugar and gold. When the coffee surge began, Brazil was already free from the limitations of colonialism. Moreover, the substitution of wage labor for slave labor after 1870 meant an increase in efficiency and the formation of a domestic market for wage goods. Finally, the greater complexity of coffee production and trade established important sectorial linkages within the Brazilian economy.

Coffee was introduced in Brazil early in the eighteenth century, but initially it was planted only for domestic use. It took the high world prices of the late 1820s and early 1830s to turn coffee into a major export item. During the initial phase, production was concentrated in the mountainous region near Rio de Janeiro. This area was highly suitable for coffee cultivation, and it had access to fairly abundant slave labor. Moreover, the coffee could be transported easily on mule trains or on animal-drawn carts over short distances to the ports.

An entrepreneurial class established in Rio de Janeiro during the mining surge was able to induce the government to help create basic conditions for the expansion of coffee, such as removing transportation and labor bottlenecks. From the area near Rio de Janeiro, coffee production moved along the Paraíba Valley toward São Paulo State, which later became Brazil's largest exporting region. Coffee was cultivated with primitive techniques and with no regard to land conservation. Land was abundant, and production could expand easily through the incorporation of new areas. However, it soon became necessary to ease two basic constraints: the lack of transportation and the shortage of labor.

The cultivation of coffee farther away from ports required the construction of railroads, first around Rio de Janeiro and into the Paraíba Valley, and later into the fertile highlands of São Paulo. In 1860 Brazil had only 223 kilometers of railroads; by 1885 this total had increased to 6,930 kilometers. The main rail link between São Paulo's eastern highlands and the ocean port of Santos allowed for a rapid expansion of coffee into the center and northwest of the state.

After the initial coffee expansion, the availability of slaves dwindled, and further cultivation required additional slaves. However, by 1840 Brazil was already under pressure to abolish slavery, and a series of decrees were introduced, making it increasingly difficult to supply the new coffee areas with servile labor. In the 1870s, the shortage of labor became critical, leading to the gradual incorporation of free immigrant labor. The coffee expansion in the west-northwest of São Paulo State after 1880 was made possible largely by immigrant labor. In 1880 São Paulo produced 1.2 million 60-kilogram coffee bags, or 25 percent of Brazil's total; by 1888 this proportion had jumped to 40 percent (2.6 million bags); and by 1902, to 60 percent (8 million bags). In turn, between 1884 and 1890 some 201,000 immigrants had entered São Paulo State, and this total jumped to more than 733,000 between 1891 and 1900. Slavery was abolished in 1888.

The Brazilian economy grew considerably in the second half of the nineteenth century. Coffee was the mainstay of the economy, accounting for 63 percent of the country's exports in 1891. However, sugar, cotton, tobacco, cocoa, and, at the turn of the century, rubber were also important. During the first three decades of the twentieth century, the Brazilian economy went through periods of growth but also difficulties caused in part by World War I, the Great Depression, and an increasing trend toward coffee overproduction. The four-year gap between the time a coffee tree is planted and the time of the first harvest magnified cyclical fluctuations in coffee prices, which in turn led to the increasing use of government price supports during periods of excess production. The price supports induced an exaggerated expansion of coffee cultivation in São Paulo, culminating in the huge overproduction of the early 1930s.

The 1840 to 1930 period also saw an appreciable but irregular expansion of light industries, notably textiles, clothing, food products, beverages, and tobacco. This expansion was induced by the growth in income, by the availability of foreign exchange, by fiscal policies, and by external events, such as World War I. Other important factors were the expansion of transportation, the installed capacity of electric energy, increased urbanization, and the formation of a dynamic entrepreneurial class. However, the manufacturing growth of the period did not generate significant structural transformations.

Economic growth in the nineteenth century was not shared equally by the regions. Development and growth were concentrated in the Southeast. The South Region also achieved considerable development based on coffee and other agricultural products. The Amazon Basin experienced a meteoric rise and fall of incomes from rubber exports. The Northeast continued to stagnate, with its population living close to the subsistence level.

Brazil - The Economy - A Period of Sweeping Change, 1930-45

The decade of the 1930s was a period of interrelated political and economic changes. The decade started with the 1930 revolution, which abolished the Old Republic (1889-1930), a federation of semiautonomous states. After a transitional period in which centralizing elements struggled with the old oligarchies for control, a coup in 1937 established the New State (Estado Novo) dictatorship (1937-45) (see The Era of Getúlio Vargas, 1930-54, ch. 1).

A review of the evolution and structural changes of the industrial sector since the end of World War II reveals four broad periods. The postwar period to 1962 was a phase of intense import substitution, especially of consumer goods, with basic industries growing at significant but lower rates. The 1968 to 1973 period was one of very rapid industrial expansion and modernization (between 1962 and 1967, the industrial sector stagnated as a result of adverse macroeconomic conditions). The 1974 to 1985 phase was highlighted by import substitution of basic inputs and capital goods and by the expansion of manufactured goods exports. The period since 1987 has been a time of considerable difficulties.

As a result of the problems associated with import-substitution industrialization and the reforms introduced by the military regime after March 1964, the Brazilian economy lost much of its dynamism between 1962 and 1967. The average rate of growth of GDP in the period declined to 4.0 percent and that of industry to 3.9 percent. In part, stagnation resulted from distortions caused by the strategy. Moreover, political troubles negatively affected expectations and precluded the formation of a coalition to back the introduction of tough measures to control inflation and the balance of payments crisis. Political troubles also hindered the removal of obstacles to growth.

The 1964 coup dealt with the political obstacles by forcefully restraining opposition to the military agenda of change. With the objective of transforming Brazil into a modern capitalist economy and a military power, the regime implemented a series of reforms aimed at reducing inflation, at removing some of the distortions of import-substitution industrialization, and at modernizing capital markets. The regime gradually introduced incentives to direct investment, domestic and foreign, and tackled balance of payments problems by reforming and simplifying the foreign-exchange system. In addition, the regime introduced a mechanism of periodic devaluations of the cruzeiro, taking into account inflation. Finally, the military government adopted measures to attract foreign capital and to promote exports. It took steps to expand public investment to improve the country's infrastructure and later to develop state-owned basic industries.

Brazil - The Economy - Spectacular Growth, 1968-73

The effect of the 1974-85 period's industrialization on the balance of trade was significant. The balance of trade moved from an average deficit of US$3.4 billion in the 1974-76 period to an average surplus of US$10.7 billion in the 1983-85 period. In 1985 the share of manufactures (processed and semiprocessed) of total exports reached 66 percent, and between 1971-75 and 1978-83 the share of basic input imports in total imports declined from 32.3 percent to 19.2 percent. The recession and stagnation of the early 1980s had a role in reducing imports. However, import substitution was also important, as demonstrated by the few years of the 1980s that experienced a significant growth in GDP while the trade surplus was maintained.

Between 1981 and 1992, the GDP increased at an average annual rate of only 1.4 percent and per capita income declined 6 percent. Gross investment, as a proportion of GDP, fell from 21 to 16 percent, in part as a result of the fiscal crisis and the loss of public-sector investment capacity. The decline also reflected growing uncertainties regarding the future of the economy. The 1980s became known as the "lost decade," and its problems spilled over into the 1990s. Despite the stagnation of the 1981-92 period, inflation remained a major problem. It sometimes reached very high rates, prompting the implementation of short-lived shock-stabilization programs.

Brazil - The Economy - The 1981-84 Period

In 1979 a second oil shock nearly doubled the price of imported oil to Brazil and lowered the terms of trade further. The rise in world interest rates increased sharply Brazil's balance of payments problem and the size of the foreign debt. Nevertheless, the government continued borrowing, mainly to face an increasing debt burden, while it tried vainly to maintain the high-growth strategy. At the beginning of the 1980s, however, the foreign-debt problem became acute, leading to the introduction of a program to generate growing trade surpluses in order to service the foreign debt. The program was achieved by reducing growth and, with it, imports, and by expanding exports. As a result, in 1981 real GDP declined by 4.4 percent. The 1982 Mexican debt crisis ended Brazil's access to international financial markets, increasing the pressure for economic adjustment.

The austerity program imposed by the International Monetary Fund (IMF--see Glossary) in late 1979 continued until 1984, but substantial trade surpluses were obtained only from 1983 on, largely as a delayed result of the import-substitution industrialization programs of the 1970s and the reduction in imports brought about by economic decline. The austerity program enabled Brazil to meet interest payments on the debt, but at the price of economic decline and increasing inflation.

During the second half of the 1980s, it became increasingly clear that a large-scale fiscal reform, one that enabled noninflationary financing of the public sector, was needed not only to control inflation but also to restore the public sector's capacity to invest. Both were essential for an economic recovery. However, political obstacles prevented the reform from materializing. And, because inflation had become the most visible symptom of the public-sector disequilibrium, there were several attempts to bring inflation under control through what came to be known as "heterodox economic shocks." The period saw three such shocks: the Cruzado Plan (1986), the Bresser Plan (1987), and the Summer Plan (1989).

The objective of the Cruzado Plan was to eliminate inflation with a dramatic blow. Between 1980 and 1985, the rise in the GPI had escalated from 86.3 percent to 248.5 percent annually. Early in 1986, the situation became desperate, prodding the implementation of the plan. Its main measures were a general price freeze, a wage readjustment and freeze, readjustment and freeze on rents and mortgage payments, a ban on indexation, and a freeze on the exchange rate.

The plan's immediate results were spectacular: the monthly rate of inflation fell close to zero, economic growth surged upward, and the foreign accounts remained under control. However, by the end of 1986 the plan was in trouble. The wage adjustments were too large, increasing aggregate demand excessively and creating inflationary pressures. Moreover, the price freeze was maintained for too long, creating distortions and leading to shortages of a growing number of products. The plan could have been rescued if adjustments had been made at crucial moments. Instead, inflation accelerated again, and there was a return of indexation.

The two other stabilization plans amounted to renewed attempts at bringing inflation down from very high levels. It was soon clear that without a thorough reform of the public sector, controlling inflation would be impossible. Both plans introduced a price freeze and eliminated indexation, but there were differences between them, and with the Cruzado Plan. Neither was able to address the public-sector disequilibrium effectively. The objective of the Summer Plan, for instance, was mainly to avoid hyperinflation in an election year.

In fact, the public-sector disequilibrium became virtually locked in as a result of the 1988 constitution, which created advantages for various segments of society without indicating how these advantages would be paid for. Moreover, it transferred large portions of the tax revenues from the federal government to state and municipal governments, without requiring them to provide additional public services. With less revenue and more responsibility, the federal accounts experienced growing deficits. In addition, several subsidies were locked into the legislation. These factors and the financial burden of the public debt meant growing problems of public finance.

The 1980s ended with high and accelerating inflation and a stagnant economy, which never recovered after the demise of the Cruzado Plan. The public debt was enormous, and the government was required to pay very high interest rates to persuade the public to continue to buy government debt instruments (see also Trade Policies, this ch.).

Brazil - The Economy - The 1990-94 Period

The first post-military-regime president elected by popular suffrage, Fernando Collor de Mello (1990-92), was sworn into office in March 1990. Facing imminent hyperinflation and a virtually bankrupt public sector, the new administration introduced a stabilization plan, together with a set of reforms, aimed at removing restrictions on free enterprise, increasing competition, privatizing public enterprises, and boosting productivity.

Heralded as a definitive blow to inflation, the stabilization plan was drastic. It imposed an eighteen-month freeze on all but a small portion of the private sector's financial assets, froze prices, and again abolished indexation. The new administration also introduced provisional taxes to deal with the fiscal crisis, and took steps to reform the public sector by closing several public agencies and dismissing public servants. These measures were expected not only to swiftly reduce inflation but also to lower inflationary expectations.

However, few of the new administration's programs succeeded. Major difficulties with the stabilization and reform programs were caused in part by the superficial nature of many of the administration's actions and by its inability to secure political support. Moreover, the stabilization plan failed because of management errors coupled with defensive actions by segments of society that would be most directly hurt by the plan.

After falling more than 80 percent in March 1990, the GPI's monthly rate of growth began increasing again. The best that could be achieved was to stabilize the GPI at a high and slowly rising level. In January 1991, it rose by 19.9 percent, reaching 32 percent a month by July 1993. Simultaneously, political instability increased sharply, with negative impacts on the economy. The real GDP declined 4.0 percent in 1990, increased only 1.1 percent in 1991, and again declined 0.9 percent in 1992 (see table 7, Appendix).

President Collor de Mello was impeached in September 1992 on charges of corruption. Vice President Itamar Franco was sworn in as president (1992-94), but he had to grapple to form a stable cabinet and to gather political support. The weakness of the interim administration prevented it from tackling inflation effectively. In 1993 the economy grew again, but with inflation rates higher than 30 percent a month, the chances of a durable recovery appeared to be very slim. At the end of the year, it was widely acknowledged that without serious fiscal reform, inflation would remain high and the economy would not sustain growth. This acknowledgment and the pressure of rapidly accelerating inflation finally jolted the government into action. The president appointed a determined minister of finance, Fernando Henrique Cardoso, and a high-level team was put in place to develop a new stabilization plan. Implemented early in 1994, the plan met little public resistance because it was discussed widely and it avoided price freezes.

The stabilization program had three stages: the introduction of an equilibrium budget mandated by the National Congress (Congresso Nacional; hereafter, Congress); a process of general indexation (prices, wages, taxes, contracts, and financial assets); and the introduction of a new currency, the real (for value of the real (R$)--see Glossary), pegged to the dollar. The legally enforced balanced budget would remove expectations regarding inflationary behavior by the public sector. By allowing a realignment of relative prices, general indexation would pave the way for monetary reform. Once this realignment was achieved, the new currency would be introduced, accompanied by appropriate policies (especially the control of expenditures through high interest rates and the liberalization of trade to increase competition and thus prevent speculative behavior).

By the end of the first quarter of 1994, the second stage of the stabilization plan was being implemented. Economists of different schools of thought considered the plan sound and technically consistent.

Brazil - The Labor Force and Income Levels

Substantial growth and structural transformations raised Brazil's per capita income from the low-income range in the late 1950s to the upper middle-income range in 1980. Despite the economic problems of the 1980s, per capita income remained in the upper middle-income range. Structural change had an important effect on employment and earnings and on income distribution and poverty.

Since World War II, the level of employment in Brazil has coincided generally with the expansion of the country's labor force. However, there have been considerable changes in the occupational structure (see fig. 7). The period from 1950 to 1970 witnessed slow growth in agricultural employment and a rapid increase in typically urban occupations, notably commerce and services but also industry (manufacturing, construction, and mining). The period from 1970 to 1980 was one of very rapid growth in employment, led by industry, resulting from a decade of marked economic expansion. The period between 1980 and 1990 saw an expansion of employment, led by segments of the services sector, despite the sluggish economy.

When examining the behavior of the agricultural sector in the postwar years, it is possible to identify two distinct periods: horizontal (geographical) expansion from 1949 to 1969 and conservative modernization, from 1970 to the present. In the immediate postwar years, Brazilian agriculture included an export sector that relied heavily on coffee but also on cotton, sugar, and a few minor commodities, and a semisubsistence sector that produced for the domestic market. At the time, the country's population, its per capita income, and its urban sector did not yet impose a large demand on the agricultural sector. With import-substitution industrialization, however, the situation changed drastically. This particular industrialization strategy required that the agricultural sector generate most of the economy's foreign exchange, produce growing outputs of food and some industrial inputs, and transfer resources for import-substitution industrialization. The transfer mechanism was a tax on the foreign exchange earned by coffee exports and the persistent implicit taxation of agriculture. The virtual exclusion of many agricultural products from the world market was caused by the highly overvalued cruzeiro, which resulted from this strategy. Consequently, the cheap domestic food policy that prevailed depressed prices in favor of the urban-industrial sector.

Paradoxically, the overall performance of agriculture during the horizontal expansion period was adequate. Agricultural GDP increased 4.2 percent a year between 1949 and 1969, a considerably higher growth rate than that of the population; between 1950 and 1959, food production increased 5.4 percent a year, and the production of exportables rose 4.1 percent annually. A major factor in this performance was horizontal expansion, that is, the incorporation of new land, especially along the agricultural frontier, made possible by an aggressive policy of road construction (see Frontier Expansion That Shaped Brazil, ch. 1). Moreover, the disincentives of the import-substitution industrialization policies were circumvented by maintaining ample access to land at concessionary terms for the landowning elite and for commercial farmers, reproducing a pattern established early in the colonial period.

By the late 1960s, it was clear that horizontal growth of agriculture was reaching its limits rapidly and that increases in productivity would be essential for a continued expansion of production. Moreover, the growth strategy of the military regime required a fast expansion of exports, including agricultural commodities. Thus, the government implemented a conservative modernization strategy consisting of technical change for a restricted number of subsectors and incentives for the formation of agribusiness complexes.

Technical change involved the development and adaptation of green-revolution technologies, geared mainly toward large agricultural operations that had important roles for mechanization and chemical inputs. Regarding the agribusiness complexes, the government provided strong incentives for the creation and expansion of processing industries and for the development and modernization of agricultural input industries. Moreover, the agricultural phase of the soymeal and oil, instant coffee, processed beef, poultry, orange juice, and sugar and alcohol agribusiness complexes received subsidized credit, guaranteed prices, and tax exemptions and subsidies when exported. Traditional, unprocessed, agricultural products, however, were subjected to heavy taxation and to price and other controls. As in the import-substitution industrialization phase, the production of cheap food was required, but only recently have government policies begun specifically to address this need.

Products benefiting from agricultural modernization responded well to the conservative modernization strategy. Their production methods underwent considerable technical change, and their production and yields increased markedly. Traditional products, however, failed to modernize and tended to perform poorly. They had scant access to credit and to the price-support policy. Moreover, they were frequently subjected to price controls, to a maze of regulations and export restrictions and quotas, and to competition from subsidized imports when they failed to supply the domestic market adequately.

At the beginning of the 1990s, the main crops in the modern segment were cocoa, cotton, rice, sugarcane, oranges, corn, soybeans, and wheat; those in the traditional segment included beans, manioc (cassava), bananas, peanuts, and coffee (see table 9, Appendix). Brazil is also one of the largest exporters of guavas, lemons, mangoes, passion fruit, tangerines, and tobacco. Crop production between 1970 and 1990 shows that the components of the modern segment grew considerably, both in production and in yield, while those of the traditional segment stagnated or declined. The growth in export crops allowed Brazil to become one of the world's largest soybean producers and to earn needed foreign exchange. It also allowed the substitution of sugarcane alcohol for imported oil.

Brazil - Livestock

Brazil's livestock sector went through a similar process of selective modernization. Until the early 1970s, it remained quite backward; its expansion relied chiefly on the incorporation of more land and animals into production. Following the expansion of agribusiness complexes, livestock production processes also changed. However, major differences exist between the modern and the traditional segments of the beef-cattle, poultry, and swine subsectors--the country's main livestock subsectors.

Between 1970 and 1991, Brazil's beef-cattle herd grew at a 3.1 percent average yearly rate, from 78.5 million to 152.1 million head; the slaughter of beef-cattle increased from 9.6 million to 13.9 million head; and the total carcass weight increased from 1.8 million to 2.9 million tons. However, these numbers hide large regional differences (see table 11, Appendix). The beef-cattle industry in areas near the country's more developed core has experienced considerable modernization, interlocked with the expansion of a dynamic agribusiness sector, which supplies the industry with modern inputs and slaughters and processes its animals for domestic and world markets. As a result, Brazil's beef exports increased from 98,300 tons of chilled beef and 15,800 tons of processed beef in 1970, at a total value of US$298.6 million (in 1992 dollars), to 96,800 tons of chilled beef and 127,300 tons of processed beef in 1992, at a total value of US$618.1 million. A still substantial traditional beef-cattle industry can be found in the frontier areas or in the more backward parts of Brazil; its productivity remains very low, and it is plagued by serious sanitary and management problems.

The poultry subsector experienced spectacular improvements from 1970 to 1991, changing from a small, backyard-based production into a modern industry. This change is reflected in the fact that, while the poultry flock increased 2.8 times between 1970 and 1990, from 214.3 million to 594.3 million head, the total carcass weight of the fowl slaughtered commercially increased twenty-one times, from 85,400 to 1.8 million tons. Moreover, the export of poultry products, which in 1970 was negligible, in 1992 amounted to 378,000 tons, representing a total value of US$455.6 million. The transformation of the poultry subsector into a modern industry was achieved through the development of agribusiness complexes. These modern enterprises play a central role; they provide farmers with inputs, with genetic material, and with technical assistance, in addition to buying the finished poultry from the farmers.

As for pork, the swine herd increased only 33.9 percent between 1970 and 1991, from 25.6 million to 34.3 million animals. However, a small portion of this subsector experienced considerable changes, also induced by agribusiness. Until the early 1990s, the Brazilian swine herd was composed overwhelmingly of mixed breeds of low-quality, lard-producing animals. Moreover, the management of the herd was primitive, and poor sanitation was a problem. The growing modern segment of the pork industry has a high-quality herd of meat-producing animals. Management practices have improved considerably, and there is a similar interaction between farmers and commercial and industrial enterprises.

Brazil - Fishing

With the exception of a few specialized subsectors geared to the world market, such as lobster fishing, Brazil's fishing industry has not developed well, despite the fiscal incentives it received during the 1970s. Even the specialized subsectors, including fish, crustaceans, and mollusks, only increased from 526,300 tons in 1970 to 798,600 tons in 1989.

In Brazil fishing is undertaken by businesses employing fairly modern equipment, and by thousands of independent fishermen spread along Brazil's immense coastal region. Independent fishermen employ primitive tools and fishing methods, producing for self-consumption and for sale in nearby markets. With some exceptions, the commercial segment has not expanded significantly, and in 1989 the production of fish and related catches amounted to a mere 5.3 kilograms per inhabitant.

Brazil - Industry

After 1987 problems that had confronted industry earlier in the decade intensified, adverse macroeconomic conditions persisted, and political troubles affected expectations adversely. Until the end of the 1980s, industry relied heavily on government protection and favors, but it also faced pervasive regulations and extensive governmental interference. These factors had a deleterious effect on industrial investment and on the productivity of several industrial subsectors, increasingly blunting the competitive edge they had struggled to achieve in the world market. Moreover, as a result of the fiscal crisis, the government was hard-pressed to continue to provide support and subsidies for industry and to maintain and expand the country's infrastructure.

The Collor de Mello administration, inaugurated in 1990, introduced significant changes in Brazil's economic strategy. Regarding industry, the government implemented measures to eliminate regulations, to liberalize trade, and to markedly reduce governmental favors and subsidies. It also announced a series of actions aimed at increasing industry's competitiveness. Despite these efforts, political and macroeconomic difficulties prevented the effective implementation of the new strategy, and the mounting fiscal crisis dampened efforts to rebuild and improve the badly deteriorated infrastructure. Therefore, an important part of the industrial sector failed to recover and to modernize. With stagnation, the domestic market could not give industry a dynamic push. Moreover, the reduction in investment, coupled with the deteriorating infrastructure, led to declines in competitiveness. These developments, together with fewer import barriers, caused industry's balance of trade to decline, from a peak of US$16.3 billion in 1988 to US$11.1 billion in 1991. In the early 1990s, despite sectoral weaknesses, the industrial sector became a major contributor to the country's exports and trade surplus.

Brazil - Mining

Since the early colonial period, expectations have loomed large about mineral riches hidden in Brazil's vast territory. However, the full extent of the country's mineral wealth is still unknown. Various efforts have been made to survey the country, one of which uncovered the Greater Carajás mineral province in the eastern Amazon (see fig. 9). Yet, at the beginning of the 1990s only 10 percent of the country's subsoil was known in sufficient detail. Correspondingly, the share of mining in GDP has increased but remains small; in 1950 it was only 0.4 percent, rising to 0.8 percent in 1970, to 1.0 percent in 1980, and to 2.5 percent in 1986, but declining to 1.5 percent in 1990.

The value of mineral production expanded from US$5.4 billion in 1980 to US$13.0 billion in 1990. However, only ten minerals--crude oil, iron, gold, calcium ore, natural gas, bauxite, phosphate, granite, cassiterite, and zinc--accounted for 85.5 percent of this total; crude oil alone accounted for 37.6 percent of the total, and both iron ore and gold accounted for 11.4 percent each. Apparently, the exploration of several other mineral substances has great potential, but such efforts have yet to be realized.

Advances in the early 1990s included the Greater Carajás project, which involves the production and export of iron ore, products of the bauxite-aluminum complex, and manganese, among other minerals. Overall, exports of mineral products expanded substantially, and there was a considerable import substitution of mineral inputs. In 1974 the trade balance of the mineral sector (primary, semiprocessed, and manufactured minerals) was a negative US$2.5 billion, and the deficit increased, reaching US$10.7 billion in 1980. However, by 1985 the deficit had declined to US$0.6 billion and thereafter the trade balance showed growing surpluses (US$1.1 billion in 1988, US$1.3 billion in 1989, and US$1.6 billion in 1990). This reversal was caused by an expansion of exports, especially of iron ore, products of the bauxite-aluminum complex, and manganese, and to a significant extent by reductions in crude oil imports.

Brazil's mineral policy has been marked strongly by national security considerations. Until the early 1990s, foreign capital was mostly barred from the more attractive portions of the sector. Petroleum has been a state monopoly. Another state enterprise, the giant Rio Dôce Valley Company, Inc. (Companhia Vale do Rio Dôce--CVRD), has a large share of the iron ore deposits, and it has played an important role in the development of the bauxite-aluminum complex and of other minerals. CVRD is also a major railroad and shipping operator, by far Brazil's largest exporter, and its largest generator of foreign currency. In late 1994, foreign investment funds held about 10 percent of CVRD's stock. In 1995 there were still legal obstacles to foreign participation in Brazil's mineral sector.

Brazil - Energy

The unfolding of Brazil's current difficulties in the energy arena constitutes a classic example of distortions arising from misdirected regulation combined with the action of interest groups. When import-substitution industrialization began in the early 1950s, the country's main sources of energy were firewood, charcoal, and bagasse (the dry residue from the processing of sugarcane). Because modern industrial expansion could not be based on these, a decision had to be made regarding the sources of energy to be used. Not surprisingly, electricity and petroleum products received special attention.

In 1950 Brazil's capacity to generate electricity was only 1.9 million kilowatts, and most of the required petroleum products had to be imported. An adequate supply of electric energy became critical, both for production and for a rapidly growing urban population. Petroleum requirements expanded quickly because of the decision to make the automobile industry the mainstay of import-substitution industrialization and because of the heavy reliance on trucks for short- and long-distance transportation. Ambitious road-building programs were implemented, and the domestic automobile industry quickly expanded the stock of motor vehicles, reaching 1.05 million units in 1960, 3.1 million units in 1970, and 10.8 million units in 1980.

Low electricity prices stemmed from the substitution policy and from the attempt to control inflation by restraining the increase in public-sector prices in nominal terms. Thus, the capacity of the electricity sector to generate resources for investment was affected considerably. As a result of federally induced borrowing in the late 1970s and early 1980s, the sector was also heavily indebted. Intermittent adjustments in electricity prices allowed the sector to generate profits and thus some resources for investment. However, on occasion, the government returned to the practice of manipulating consumer prices to contain inflation.

Although the federal treasury initially assumed many of the cost distortions of the energy policy, by the end of the 1980s the virtual bankruptcy of the public sector precluded this approach. In the early 1990s, the government implemented a series of measures to reduce its role. It introduced deregulation, market reforms, and privatization, but these reforms did not change the essence of the energy policy. Interest groups prevented the adoption of measures that would drastically alter the liquid combustible policy, and the agency controlling electric energy continued to lack resources for investments. Thus, the energy price structure was altered only marginally.

Low electricity prices induced a considerable substitution of electricity for other sources of energy and the expansion of electricity-intensive production, such as aluminum. The heavy investments in hydroelectricity of the 1970s and 1980s matured, creating a considerable generating capacity (50,500 million megawatts or 93.3 percent of the total generating capacity of electricity in 1993). One of the world's leading producers of hydroelectric power, Brazil has a potential of 106,500 to 127,868 megawatts, or, according to the World Factbook 1996 , 55,130,000 kilowatts. The country's two largest operating hydroelectric power stations are the 12,600-megawatt Itaipu Dam, the world's largest dam, on the Rio Paraná in the South, and the Tucuruí Dam in Pará, in the North Region (see fig. 3).

In principle, an increase in the generating capacity for electricity should have been easy to achieve. Brazil has enormous hydroelectric potential, and investments in the sector were forthcoming, although with an initial delay. However, until 1995 nationalistic considerations excluded foreign capital from the electric energy sector, and regulatory obstacles prevented domestic private investment. The federal and state governments were therefore left with the task of expanding the generating capacity. As of the early 1990s, the government continued to control the sector's production end, as well as transmission and distribution, although privatization of the sector is under consideration.

The fast-growing requirements of petroleum and petroleum by-products were met initially by imports. However, foreign-exchange difficulties, coupled with strategic considerations, led to efforts to reduce the country's dependence on imports. In the early 1950s, the government granted a near monopoly of the exploration, production, refining, and transportation of oil to the Brazilian Petroleum Corporation (Petróleo Brasileiro S.A.--Petrobrás), the state-owned oil company, and made resources available for investments. Emphasis was placed on the expansion of a domestic refining capacity because world oil prices were low and no problems were envisaged with oil supply. Thus, an important refining sector developed gradually.

The oil crises of the 1970s placed Brazil in a vulnerable situation. In 1974 almost 80 percent of Brazil's total oil consumption was imported, and the increases in oil prices imposed a substantial burden on the country's balance of payments. Consequently, reducing dependence on imported energy, particularly petroleum, became the main objective of energy policy. This reduction was to be achieved by large investments in petroleum substitutes, notably electric energy and ethanol, and by a substantial expansion in the exploration and domestic production of petroleum. Although modest oil fields were not discovered until late in the 1970s, investments in the energy sector increased from around 10 percent of total investment in the early 1970s to a peak of 23.5 percent in 1982-83. As a proportion of GDP, investment in energy increased steadily, from 2.8 percent early in the 1970s, to a peak of 5.0 percent in 1982.

The government also implemented the energy price policy in reaction to the 1979 oil shock. The basic assumption was that the price of oil would remain at its high 1979 level. Thus, emphasis on promoting substitution was absolute. The problem, however, was that this emphasis did not change after oil prices began to decline. To encourage substitution, the government set energy prices. The price of gasoline was set at a high level, not only to reduce its use but also to finance Petrobrás's exploration effort and to subsidize other petroleum products. The prices of diesel fuel and propane (extensively used for cooking) were maintained artificially low, requiring subsidies. The low diesel price was intended to keep transportation costs from increasing sharply, and social arguments were used to justify the propane subsidy.

To induce the purchase of ethanol-propelled cars, the price of ethanol was maintained at 60 percent of that of gasoline. To finance this subsidy, a mixture of 20 percent of ethanol in the gasoline was established. The high gasoline prices exceeded the cost of ethanol, and the profits were used to cover the subsidy. Specially low prices for electric energy were established to encourage the replacement of fuel oil and other oil derivatives in production.

The combination of conservation and substitution, along with the expansion of domestic production, reduced the country's dependence on imported crude oil, from around 80 percent in the late 1970s to 45.6 percent in 1990. Domestic output of crude oil increased from an average 165,000 barrels a day in 1975 to some 800,100 barrels a day by 1996. By the end of 1995, Brazil's proven reserves had reached 4.8 billion barrels and potential reserves were at 8.8 billion barrels. About 64 percent of Brazil's domestic oil comes from the continental shelf in the Campos Basin, which accounts for 83 percent of proven reserves. The country's petroleum reserves may actually reach 20 billion barrels if as yet unproven discoveries in deep water off the Brazilian coast are included.

Despite these advances, however, the rigidity of the energy price policy brought about serious problems. The maintenance of the gasoline-ethanol price differential and other inducements led to a rapid increase in the purchase of ethanol-propelled automobiles and to a growing conversion of gasoline cars to ethanol. Moreover, the basic assumption that the price of oil would remain high was incorrect. Although world oil prices declined, the price policy remained in effect for ethanol producers, owners of ethanol-propelled cars, and the motor vehicle industry. Additionally, the real gasoline price was eroded gradually by the government's tendency to fight inflation by tampering with the prices of goods and services produced by the public sector. Also, the substitution of ethanol for gasoline caused a swift reduction in the sale of gasoline in the domestic market. Consequently, the profits Petrobrás obtained initially from gasoline dwindled quickly, and the company required assistance from the treasury for its exploration program and to cover various subsidies. The sharp increase in the use of diesel fuel for transportation, created by this fuel's subsidy, together with technical rigidities in refining, forced Petrobrás to produce much more gasoline than was required by the domestic market. This excess had to be sold abroad, often at below-cost prices. Because the demand for diesel fuel continued to grow and the demand for gasoline to shrink, Petrobrás was forced to invest heavily in changing the product profile of its refineries. In the early 1990s, the government reduced the gasoline-ethanol price differential (in 1993 the price of ethanol was 78.4 percent of that of gasoline). The price of gasoline was maintained sufficiently high to prevent massive subsidies to ethanol. The prices of diesel fuel and propane were increased.

Brazil meets only 2 percent of its energy needs with natural gas, but the country's natural gas consumption is likely to increase greatly. In May 1992, the state oil companies of Brazil and Bolivia signed an agreement outlining the route for a 2,270-kilometer, US$2 billion pipeline system to deliver natural gas from Bolivian fields to Brazil's Southeast. The pipeline was scheduled to begin supplying 8 million cubic meters a day of Bolivian gas in 1997, building up to 16 million cubic meters a day by 2004.

Nuclear energy provides an interesting chapter in Brazil's energy policy. In the early 1970s, nuclear energy was considered to have great potential, but it failed to develop. In 1975 Brazil signed an agreement with the Federal Republic of Germany (West Germany) under which that country would supply eight nuclear power reactors and transfer technology for the complete nuclear fuel cycle. A small nuclear power plant--the Angra I, which has a 626-megawatt capacity--was built near Rio de Janeiro, and work was programmed to start on two larger facilities on the same site (the Angra II and III units, which were to have a combined capacity of 3.1 million kilowatts).

The Angra I plant, which has a reactor supplied by Westinghouse Electric Corporation, was completed and trial runs were made in 1982, but reactor defects delayed operations until 1983. Moreover, technical problems allowed the facility to function only intermittently. Regarding the Angra II and III plants, construction was started on the first. However, the fiscal crisis, a slower than anticipated growth in the demand for electricity in the 1980s, the adverse United States reaction to the Brazil-West Germany agreement, and a growing environmental militancy in Brazil led to slowdowns in construction.

In 1985 the agreement with West Germany was revised, and the construction of the other reactors was postponed indefinitely, in part for financial reasons. Moreover, growing fiscal difficulties led to an interruption of construction on Angra II and further postponement of Angra III. In 1988 it was estimated that the completion of the two plants would require US$2.8 billion, which was not available. In the early 1990s, there were no indications of when the two facilities would be completed. Despite the delays, the technology transfer clauses of the agreement have been maintained, and Brazil has continued to receive West German nuclear technology.

In 1990 Brazil's uranium reserves were estimated at 301,500 tons, or the equivalent of 2.1 billion tons of petroleum. A yellow-cake (see Glossary) factory and a plant to produce nuclear fuel elements have been completed, and additional processing facilities are under construction or planned. These will allow for the enrichment of uranium and the reprocessing of spent fuel. However, as was the case with the power reactors, lack of resources has slowed down developments in this area. In early 1997, the Brazilian nuclear energy program was being supplied by the only uranium mine operating in Brazil, in Poços de Caldas, Minas Gerais State. That mine is being deactivated and replaced by the Lagoa Real/Caetité Mine in the Caetité District in southwestern Bahia State (see Nuclear Programs, ch. 6).

Brazil - Tourism

Brazil's natural wonders include the Amazon; the wildlife-packed Pantanal wetlands; 8,850 kilometers of superb Atlantic coastline, including 3,200 kilometers of white sand beaches in the Northeast running from São Luís in the north to the Bahia Basin in the south; and the waterfalls at Foz do Iguaçu. Brazil has one of the world's most spectacularly located cities, Rio de Janeiro, which hosts the annual Mardi Gras Carnaval (Carnival); one of the largest cities, São Paulo; one of the most modernistic, Brasília; and one of the most ecologically advanced, Curitiba. Other popular cities include Salvador, Ouro Prêto, and Manaus.

Traditionally, Brazilian politicians have regarded travel and tourism as elitist and an unnecessary luxury. This view has been changing, however, as politicians have begun to see travel and tourism as a major industry. In the early 1990s, about 6 million jobs were linked to Brazil's travel and tourism industry. The industry is one of the country's biggest employers, involving one in every eleven workers. It contributes an estimated 8 percent to the country's GDP. This figure compares favorably with Latin America's average of 5.1 percent, but it is well below the world average of 10.2 percent.

Since the United Nations-sponsored Rio Earth Summit (Eco-92) in 1992, the Brazilian government has targeted ecotourism as a priority. For example, the government is encouraging foreign investment in tourist facilities in Amazônia. The Ministry of Commerce, Industry, and Tourism includes a cabinet-level official in charge of tourism policies. The National Secretary of Tourism and Services, the National Tourism Board, and the state and municipal tourist authorities are responsible for the day-to-day administration of the sector.

The development of tourism in the seven states that make up the impoverished Northeast has received special attention. More than 3 million Brazilian and foreign visitors boosted hotel occupancy in the Northeastern states from 43 percent in 1991 to 67 percent in 1993.

In 1992 some 2,235,000 passengers flew to Brazil, an increase of 14.5 percent from 1991, and the same number flew out of Brazil. About 513,000 of these visitors flew between Argentina and Brazil, and according to Brazil's Civil Aviation Department (Departamento de Aviação Civil--DAC), more than 541,000 passengers flew between the United States and Brazil, an increase of 10.4 percent from 1991. The Brazilian Tourism Agency (Empresa Brasileira de Turismo--Embratur) found that 72.6 percent of those who came to Brazil in 1992 came for tourism; the rest came for business, conferences, and conventions, including Eco-92. In 1993 about 1.6 million foreign visitors traveled to Brazil.

The rise in interest in the privatization of state-owned enterprises in Brazil that began in the 1980s reflects similar trends worldwide. Although much of the rhetoric used by the advocates of privatization emphasized economic efficiency and competitiveness, much of Brazil's privatization experience since 1990 is better understood as a response to the fiscal pressures on the public sector, which worsened significantly in the 1980s.

The sale of state enterprises to private buyers, both domestic and foreign, offered an attractive means to reduce the fiscal pressures. First, the sale of an enterprise provided an immediate revenue gain for the government. Second, to the extent that the enterprise sold was operating at a loss, the future fiscal burden on the public sector was reduced. Finally, the conversion of a state enterprise into a profitable private one increased the future tax revenues of the government.

Implicit in these motives for privatization is a difficult choice for the government. The first reason suggests that the greatest immediate revenue effect would be obtained from the sale of the most profitable firms, such as the CVRD (Rio Dôce Valley Company), Brazil's iron mining and exploring complex. The second consideration, however, suggests that long-term revenue benefits would be more likely from the sale of enterprises that have had a long history of low or negative returns, such as the RFFSA (Federal Railroad System, Inc.). Brazilian privatization experience and policies since the 1980s reflects the difficulty of deciding which firms to privatize first.

Although some privatization occurred between 1980 and 1990, it was confined to cases in which the federal government had taken over firms in financial difficulties, and did not touch any of the major state-owned enterprises that had been established purposely by the federal government and by some state governments in the preceding three decades. In all, only thirty-eight enterprises were privatized by the federal government before 1990, and the total receipts of the government were only US$723 million.

Policy changed significantly with the entrance of the Collor government in 1990, which made privatization one of the major planks of its economic platform. The National Privatization Program (Programa Nacional de Desestatização--PND), which was created by the National Economic Development Bank (Banco Nacional de Desenvolvimento Econômico--BNDE), expanded the scope of privatization to include a number of the enterprises formerly considered as "strategic" by earlier governments. During the Collor government between 1990 and 1992, fifteen state-owned enterprises were privatized, yielding about US$3.5 billion in total proceeds. The most important sale was that of the Minas Gerais Iron and Steel Mills, Inc. (Usinas Siderúrgicas de Minas Gerais S.A.--Usiminas) steel company in October 1991, which alone accounted for nearly twice the revenue of all previous privatizations and sold for US$2.3 billion. The Japanese holding company Nippon Usiminas acquired about 18 percent of the shares. During this period, most sales were exchanges of equity in state-owned enterprises for different types of public debt or "soft money," rather than for cash.

Under the Franco government (1992-94), privatization continued but with a greater emphasis on sales for cash. Eighteen state-owned enterprises were sold, yielding over US$5 billion. Among the most important enterprises sold in this period was the Brazilian Aeronautics Company (Empresa Brasileira Aeronáutica--Embraer), an aircraft manufacturer, which had been established in 1969 and controlled by the Ministry of Aeronautics. By 1994 only twenty-five state-owned enterprises had been sold, mostly in exchange for debt certificates and little hard cash. Other enterprises included several chemical, fertilizer, and mining companies, with the steel sector wholly privatized by the end of 1994.

Privatization policy under the Cardoso administration, beginning in 1995, shifted focus to state-owned enterprises responsible for the major part of Brazil's economic infrastructure, among them enterprises in the energy, transportation, and communications sectors. The first major privatization was the sale of the Espírito Santo Power Plants, Inc. (Espírito Santo Centrais Elétricas S.A.--Escelsa), the federally owned power company serving the state of Espírito Santo, in July 1995. In a departure from earlier policy, the CVRD, one of Brazil's largest state enterprises, was included in the program by the new government. Although Brazil's largest state-owned enterprises, Petrobrás, remained outside the program because of constitutional restrictions, appraisals were begun of the RFFSA and of the remaining federally owned power companies.

Brazil - The Real Plan

On July 1, 1994, Brazil implemented the last, and to date, most successful of its economic stabilization programs to end inflation. Nearly three years later, the Real Plan was intact, far outliving its ill-fated predecessors. By late 1996, inflation by some measures approached an annual rate of less than 20 percent, a remarkable achievement in an economy that a few years earlier would have regarded even a monthly rate at this level a triumph. The new monetary unit created by the plan, the real (pl., reais ; for value of the real , see Glossary), actually appre-ciated against the dollar in the months after its creation.

The design and implementation of the Real Plan also distinguished it from the earlier plans, and may help explain some of its success in its first years. Unlike the earlier plans, it did not depend on a general price and wage freeze to stop inflation. At the heart of the new plan was the de-indexation of the Brazilian economy, which was accomplished in part by converting salaries and a number of other prices in the months preceding the implementation of the Real Plan into Real Value Units (URVs), which were then linked to the United States dollar. After July 1, 1994, prices in URVs were converted into reais , which began officially at par with the dollar, but traded at a premium in the open market. Although the new plan made no guarantees of automatic price and wage adjustments to compensate for inflation, few restrictions were placed on employers and employees in private wage negotiations.

Although some observers characterized the Real Plan as a form of "dollarization" of the Brazilian economy, in which prices and wages that previously had been indexed to inflation were now linked to a foreign currency, there was a significant difference between Brazil's approach and that of countries like Argentina, which attempted to stabilize the value of their currencies through a formal and legal link to the dollar. Brazil did not make such a commitment, and despite the stability of the real against the dollar throughout the first year and a half of the Real Plan, there was a widespread expectation that the real eventually would depreciate.

This exchange-rate policy and the expectations that accompanied it had significant consequences for the domestic Brazilian economy. Expectations of an eventual depreciation of the currency, coupled with the short-term stability of the exchange rate and much greater mobility of financial capital between Brazil and world financial markets led to a strong appreciation of the real and painfully high domestic real interest rates. Lenders required interest rates that would protect them against a possible depreciation. With prices stable or even falling for some products, borrowers could not repay in currency that had lost its value through inflation, as they were accustomed to do in earlier years.

International enthusiasm for the Real Plan, reinforced by its apparent success in its first year, led to the resumption of large-scale flows to Brazil, permitting the government to maintain its policy of approximate exchange-rate stability. Despite the worries about a depreciation, and several speculative attacks against the real in its first year, the high level of capital flows to Brazil more than financed the high level of imports stimulated by the resumption of economic growth, leading to a sharp increase in Brazil's reserves of foreign currency. By late 1995, they totaled more than US$50 billion.

The fall in inflation, supported in part by the strong real , led to important changes in income flows within the Brazilian economy. Decades of inflation had produced a large financial sector, which flourished in part through the spread between borrowing and lending rated in a high-inflation environment. With the fall in this revenue, a number of financial intermediaries came under severe pressure, despite the high real interest rates. During 1995 there were bank insolvencies, with failures avoided by Central Bank intervention to merge these intermediaries with stronger ones.

The fall in inflation also had consequences for Brazil's income distribution. Lower-income groups, which had borne a disproportionately large share of the inflationary burden because of their relatively limited access to fully indexed savings opportunities and to the tendency of minimum salaries and other nominal wages to lag behind inflation, benefited significantly from the Real Plan. In the months following its implementation, sales of consumer durables, especially those purchased by lower-income groups, increased significantly, leading the government in 1995 to attempt to restrict consumption and reward saving. The rise in the real incomes of lower- income groups produced a level and depth of political support for the Real Plan that made it difficult for unions and other groups opposing many of the policies of the new Cardoso government to confront the Real Plan head on. It also may have helped the government in its efforts to secure the support of the Congress for a number of its proposed reforms.

The Real Plan's success in its first year strengthened the political support that the government needed to attack the underlying fiscal disequilibrium. By 1995 the operational budget of the federal government was significantly smaller than it had been in earlier years, and the attempts by some organized sectors, among them the employees of state enterprises, to overturn many of the policies of the Real Plan had been resisted. Further progress in reducing the pressures on the finances of Brazil's public sector rested on the rates of the first year of the Real Plan, as well as on the support of Congress for the fiscal reforms proposed by the Cardoso government.

By the end of 1996, the Real Plan appeared to have succeeded in its objective of ending decades of inflation and macroeconomic uncertainty. It had also bought valuable time for the government to attack the underlying fiscal imbalance that generated the inflationary pressures. There was little time to be lost, however, and the rise in public-sector expenditures, especially at the state and municipal levels, cast a cloud over the prospect for the long-run success of the Real Plan. This rise was the consequence of a number of factors, among them the surge in costs for public-sector employees created in part by the requirements of the 1988 constitution. In the short run, the rise in interest costs in the first year of the Real Plan was a heavy burden for many states and municipalities, some of which were unable in 1995 to pay employees their full salaries. Other pressures on the public sector included rising pension and social security costs, caused in part by demographic trends and by the generous promises of earlier governments to future retirees.

Brazil - Trade Policies

Brazil's economic history has been influenced remarkably by foreign trade trends and policies. Successive cycles of export booms in such commodities as sugar, gold and diamonds, rubber, and coffee played major roles in Brazilian development before World War II. In the 1930s, the collapse of coffee prices signaled a turn inward, resulting in a nascent industrialization. In succeeding decades, industrial development was fostered deliberately through restrictive trade policies, making Brazil a relatively closed economy by the mid-1960s. Only in the early 1990s did Brazil begin significant liberalization of its trade policies, and even these reforms were modest by comparison with those in a number of other Latin American nations.

Government intervention in foreign trade has a long history in Brazil, reaching back to the colonial period when Portugal forbade Brazilian trade with other nations. Following independence in 1822, Brazil opened its ports and expanded its trade with other nations, particularly Britain. Extensive government regulation of trade continued, however, with tariffs providing over half of the government's revenue before World War I. Other forms of intervention in trade included the 1906 coffee price support plan, which was a sophisticated attempt to exploit Brazil's monopolistic position in the world coffee market.

Before World War II, trade policies were used mostly as a source of revenue or as a response to specific groups such as the coffee producers, rather than as a means of achieving national economic goals. In the early 1950s, Brazil began to use trade policy in a more deliberate way to promote industrialization. The forced reduction in Brazilian imports after 1929 had resulted in the first major industrial growth in Brazil, centered in São Paulo. Heeding this apparent lesson, policy makers in the 1950s argued that measures that deliberately reduced imports would stimulate domestic production, thereby encouraging technological development and increasing employment in activities that were regarded as more "modern" than Brazil's traditional agricultural and extractive activities.

Between 1953 and 1957, Brazil attempted to use multiple exchange rates to encourage some trade transactions and discourage others. In 1957 the country instituted a broad ad valorem tariff system under Law 3,244. The new system created not only a new tariff structure but also the administrative machinery to impose or revise tariffs in accord with national development objectives and requests by domestic producers for protection. Implementation of the system heavily favored domestic producers of manufactured consumer goods, while permitting the import of capital and intermediate goods at much lower tariffs. For some goods, protection was great enough to completely eliminate competing imports from the Brazilian market.

Following the imposition of military rule in 1964, Brazil once again modified its trade policies. The new government moved quickly to eliminate some of the restrictions on Brazilian exports, and it provided special incentives for exports of manufactures. In March 1967, it significantly cut tariffs, which fell to about half their former level in a number of sectors. Brazilian imports soon increased, but this was more the result of the acceleration of economic growth after 1967 than of the tariff reforms. During the "economic miracle" between 1967 and 1973, the GDP grew at record rates. Throughout this period, trade policy continued to be relatively open in comparison with Brazilian policies before or after the economic miracle.

The steep rise in world oil prices that began in late 1973 soon ended Brazil's move toward greater trade openness. The approximate balance between imports and exports in the early 1970s became an unprecedented US$4.7 billion deficit in 1974. Although record levels of external capital flows financed this deficit, Brazilian policy makers responded by restricting imports. In June 1974, import financing for many products was suspended, while tariff rates on more than 900 items were doubled. Over the year, restrictions were increased further, and in 1975 the government required that imports be paid for in advance with deposits that did not earn interest or any correction for inflation. On the export side, further measures were taken to promote exports, especially for manufactures. Despite these measures, Brazil's trade balance remained in deficit for most of the 1970s.

The worsening of Brazil's external payments position in the early 1980s forced policy makers to turn to other measures to attempt to restore external balance, among them adjustment in the exchange rate, which was devalued sharply early in 1983. Controls on trade were not relaxed, however, and the cessation of voluntary lending to Brazil following the Mexican debt crisis in 1982 had significant effects on trade policy. Import controls that had been introduced in response to the worsening trade balance in 1980 were strengthened by centralization of all foreign-exchange transactions in the Central Bank. A negative list, which enumerated items whose import was suspended, was expanded considerably, and financing for imports was further restricted.

The combination of tightened import controls, real depreciation, and the fall in domestic demand induced by the restrictive macroeconomic policies of the early 1980s resulted in a sharp adjustment in Brazil's external accounts. The magnitude of the adjustment appears to have surprised even many of its proponents, both in the Brazilian government and among creditors. After 1983 the massive trade surpluses averaged more than 3 percent of GDP, compared with negative or negligible levels through most of the 1968-82 period. In 1984, as the full effects of the adjustment program were felt, exports were about double imports, and Brazil's trade surplus reached an unprecedented 6.1 percent of GDP, far exceeding the comparable shares in other important economies such as Japan (3.5 percent of GDP) and West Germany (3.8 percent).

Most of the import controls that were used after 1982 were in place well before the cessation of voluntary external lending. One of these measures, introduced in 1980 following the worsening of the current account, was the financing requirement for specific imports. Another form of import control, much used after 1982, was the establishment of formal import programs, which were negotiated agreements between importing firms and the Department of Foreign Trade (Carteira de Comércio Exterior--Cacex). These agreements in effect turned the import decision into a process that depended more on administrative and political considerations than on economic merit. The high degree of administrative control that these agreements gave to Cacex created problems, because middle-level trade officials acquired extensive control over the fortunes of an enterprise through their ability to approve particular trade transactions.

By 1984 it was clear that the successful external adjustment had a domestic price, as inflation accelerated to more than 200 percent at annual rates. Trade policy consequently began to be viewed as a potential instrument for internal stabilization, with some import liberalization viewed as a potential contributor to reduced inflation.

In late 1984, a number of the direct controls on imports were cut back, and the number of products on the negative list was reduced substantially. Import financing requirements were also relaxed through exemptions, and tariff surcharges were replaced by smaller additions to the legal tariff. On the administrative side, the Cacex policy of import restrictions for balance of payments purposes was reduced.

In February 1986, following several months in which the prices accelerated at an average of more than 500 percent, the Sarney government decreed the now infamous Cruzado Plan. Although the plan was presented as a definitive program to de-index the economy and wipe out inflation, its main thrust was to freeze prices. Wages were not frozen and in fact were increased by 8 percent when the plan was announced. Foreign economic policy in the plan consisted primarily of fixing the exchange rate, and no trade policy changes were included in the plan.

The combination of increased domestic real income, a fixed nominal exchange rate, and a fall in nominal interest rates soon produced a sharp increase in excess demand. In sectors less affected by price controls, such as clothing or used automobiles, prices rose sharply. The effects on the trade balance were apparent within several months after the plan was decreed. The value of monthly exports fell by about 40 percent between March and November 1986, and imports rose rapidly beginning in May. For the year, exports fell by 12.7 percent from 1985 levels, and imports increased by 5.7 percent. Brazil's external payments problems, which had appeared to be largely resolved by the record trade balances after 1983, emerged once again, as the trade balance fell from US$12.5 billion in 1985 to US$8.3 billion in 1986.

The policy response to the worsening trade balance consisted of a small 1.8 percent devaluation in October 1986, accompanied by administrative tightening of import controls. In early 1987, the negative list was once again increased, and some of the loss in exchange-rate competitiveness was regained with nominal devaluations of the cruzado (for value of the cruzado--see Glossary) of 7.8 percent and 8.7 percent in May and June of 1987.

Brazil's second price-stabilization attempt, popularly known as the Bresser Plan, was announced by the new minister of finance, Luiz Carlos Bresser Pereira, in June 1987. In contrast to the ill-fated Cruzado Plan, the Bresser Plan did not attempt to use external economic policy as an instrument for internal stabilization. Brazil returned to its earlier and generally successful "crawling