Liberalism versus Nationalism: The Prodevelopment Ideology in Recent Brazilian Political History (1930-1997).

De Lima, Paulo-Tarso Flecha

Nationalism and the Vargas Years

With the country facing a major economic and political crisis, Brazil's presidential elections of 1930 were held as usual. Not surprisingly, the government's candidate, Julio Prestes, emerged as the winner. Calling the election a fraud, the members of the defeated "Liberal Alliance"(1) launched a political and military insurrection, led by their presidential candidate, Getulio Vargas. From the states of Rio Grande do Sul, Minas Gerais, Pernambuco, and Paraiba, the rebels marched toward Sao Paulo and Rio de Janeiro. Within twenty-one days, the government was overthrown by a military junta, and end of the "old republic" was proclaimed. Political power was handed to Getulio Vargas, who arrived triumphantly in the national capital of Rio de Janeiro on October 30, 1930. He would rule Brazil until the end of World War II.

Although the so-called 1930 Revolution triumphed as a movement championing classical liberalism and true democracy, the Vargas administration was distinguished by a persistent move toward nationalism and the creation of a powerful and interventionist federal government. During the fifteen years of continuous Vargas rule, the prodevelopment ideology of devenvolvimentismo(2) flourished and gained deep roots in Brazilian society. From 1930 to 1980, regardless of who was in power, whether military or civilian, elected or imposed by force, the history of the Brazilian presidency can be read as the inexorable unfolding of the desenvolvimentista agenda. What mattered was "developing" the country virtually at any cost--pushing an accelerated transition from agriculture toward industry, from the rural areas toward the big urban centers. State intervention in the economy was viewed as necessary to overcome underdevelopment and the "dependent" nature of Brazilian economy. Market forces were discredited and seen as shackles chaining Brazil to its colonial and backward past. According to this view, laissez-faire economic policies, monetary orthodoxy, and trust in the theory of "comparative advantages" would simply maintain the country in its vulnerable state of having an economy based only on exports of primary goods, with prices dictated by the uncertainties of the international commodities market.

That strategy was unquestionably a tremendous success. For fifty years in a row, Brazil's GDP woluld grow at an average annual rate of 7 percent, allowing the country to metamorphose itself from a preindustrial amalgam of isolated and backward economic islands into the world's ninth largest economy, with a thriving urban society and a powerful middle class espousing modern and democratic values.

The change did not happen overnight. Vargas reached the presidency supported by a broad coalition of many different groups. The 1930 movement represented the interests of some displaced backward elites, some more enlightened elites, and even some incipient modern elites, as well as the interests of a rising urban middle class, among which some radical elements could be found. In short, every segment of society that had a reason to believe that the Sao Paulo coffee-based hegemony under the old republic was inimical to its own interests, or beliefs, supported the "revolution." Yet, none of these groups was strong enough to decide on the new path to be followed. Hence, from the start, Vargas decided to place himself above the disputes within his coalition, adopting an imperial role as mediator. He would embody the idea of an independent central state, free from the pressures of any specific social class or interest group. His magic touch was to always search for an identification (whether real or apparent) between his own will and the national will.

The period of the "transitory" presidency (1930-34) was marked by disputes between the groups connected to the tenentista(3) movement and the more traditional politicians, who represented the interests of their local elites. At first, the "lieutenants" had the advantage, some of them being designated as appointed governors in problematic states, such as Sao Paulo. They tried to push forward an ambitious agenda, including (1) nationalization of banks, mines, and waterfalls; (2) a struggle against unproductive farms; and (3) labor reforms, with adoption of a minimum wage, limits to working hours, and rules designed to protect women and children from exploitation. Concerned that elections would jeopardize their program of reforms, the lieutenants were glad to adopt the new antiliberal ethos of the 1930s. Skeptical of Brazilian democracy, the lieutenants wanted to have the transitory presidential term extended until all the most significant reforms were adopted.

The elites reacted to the lieutenants' agenda by pressing for redemocratization, with the adoption of a new constitution. The constitucionalista (constitutionalist) movement and the rejection to the growing influence of the lieutenants gained considerable strength in Sao Paulo. In 1932, Sao Paulo launched an armed insurrection against the federal government, hoping for support from Minas Gerais and the northeastern states. Vargas maintained his grip on all other states and, after three months of civil war, defeated the forces from Sao Paulo.

At first glance, this episode could have been viewed as the triumph of the lieutenants and the "swan song" of the coffee oligarchy. Vargas could, however, see further ahead. He adopted conciliatory measures toward the Sao Paulo revolutionaries and made sure that their state's interests would be considered by the federal government. While eliminating Sao Paulo's political indolence, Vargas saw that this crucial state would be economically satisfied. He adopted measures to ensure that the coffee producers' harvest would be purchased by the federal government, and he also created schemes for them to have their debts reduced. Moreover, his industrializing policies ended up mainly benefiting Sao Paulo, where the coffee boom, urbanization, and higher wages had already facilitated the birth of an incipient consumer-goods industry. The industrializing policies fashioned by Vargas gave Sao Paulo's industries tax and currency exchange subsidies, transferring to that entrepreneurial state taxes collected in less developed parts of the country. The idea was to concentrate efforts where they could actually work.

On the political level, Vargas dealt with the immediate pressures by favoring redemocratization and playing down the tenentista card. In 1933, women were granted the right to vote. A Constitutional Assembly was elected in 1934, and later that year a new constitution was promulgated. The 1934 Constitution was hailed by the majority of the country as an eminently balanced and democratic text, which fulfilled the promises of the 1930 Revolution. An independent electoral system was created, and voting became compulsory. The federal structure was strengthened, but the states still retained a good deal of power. The Constitutional Assembly also confirmed Vargas as president, with a four-year term of office that was to last until 1938. Free and direct presidential elections were scheduled for 1938, with the reelection of incumbents forbidden. This new democratic order was short-lived. In 1937, the "Estado Novo" ("New State") dictatorship was installed.

In reality, from 1934 to 1937, the democratic zeal declined steadily throughout the country. The elites maintained their firm grip on local and state politics, contributing to the tarnishing of liberal democracy. The only new factor in the political debate was the sharp rise of two opposing urban political movements, the fascist-oriented Partido Integralista and the leftist front Alianca Nacional Libertadora (ANL) led by the Communist Party chairman, Luis Carlos Prestes. In 1935, confronting some resistance in Congress, Vargas pushed for the approval of a National Security Law, designed to give the federal government special powers to repress radical movements. The ANL was declared illegal in July 1935. In November of that year, the ANL led armed rebellions in Rio de Janeiro, Pernambuco and Rio Grande do Norte. The intentona Comunista (Communist uprising) was brutally repressed, and martial law was imposed in the country.

The Communist threat, coupled with the worsening of the international political environment, enabled Vargas and his top advisors, Generals Goes Monteiro and Eurico Dutra, to justify their continuation in power. As the campaign for the 1938 presidential election began, democracy and liberalism were seen as little more than a return to the oligarchic rule of the old republic. On November 10, 1937, alleging "a clear and present danger to the national sovereignty," Vargas declared the Constitution to be null and void, closed the Congress, and assumed authoritarian powers. On hearing the news, members of the closed Congress went out in the street to hail the dictator.

The minister of justice, Francisco Campos, wrote a new Constitution giving the president legislative and executive powers. Moreover, the president could fire or transfer any government official, as well as order the retirement of any military officer deemed to constitute a threat to "national interests." Article 186 imposed a permanent "state of emergency" in the country, allowing the government to order arrests, trespass on suspects' properties, send "dangerous" citizens into exile, and impose prior censorship of the media. When it became known that Francisco Campos's text was inspired by the Polish fascist Constitution, the public immediately nicknamed it the Polaca, meaning the "Polack girl," a pejorative term used to refer to foreign prostitutes.

At first, the Estado Novo regime seemed to some to indicate the strengthening of the fascist-oriented Integralist Party. But Vargas chose to establish his regime as being independent from any political party. The regime was the government, the government was the Brazilian State, and the Brazilian State was embodied in Vargas himself. Feeling betrayed, the integralists announced that they no longer supported the regime and, in May 1938, tried to overthrow Vargas. The ill-fated putsch only helped the president consolidate his authority.

Free from the tutelage of political groups, Vargas and his military advisors designed the Estado Novo as a classical model of conservative modernization. The prodevelopment ideology of tenentismo was there, but the radical element of far-reaching social reform was removed. The nationalist military leaders championed industrialization as a means of making of Brazil a powerful nation. What mattered was Goes Monteiro's motto, "a strong State, with a strong Army."

From 1937 to 1945, the Estado Novo reformed and gave structure to the state bureaucracy, establishing for the first time in Brazilian history objective and merit-based criteria for the selection and promotion of government officials. Labor reforms were finally adopted, bringing into existence the pension system, the minimum wage, the eight-hour shift, paid vacations, job security, financial compensation for unjustified dismissals, regulatory standards for the permissible use of women and minors in the workforce, and rules for collective bargaining over wages. Independent unions and strikes were not allowed, but state intervention, through the action of the Ministry of Labor and the labor court system, would guarantee that workers' interests and rights would be respected. In 1943, the president signed the Consolidacao das Leis do Trabalho (Consolidation of Labor Laws [CLT]), which established the basic legal framework that still governs the organization of labor in Brazil today.

Declaring himself to be an admirer of Roosevelt's New Deal, Vargas fostered industrialization while still supporting the coffee producers and stimulating modernization and product diversification in agriculture. His favorite project, however, was the creation of the basic conditions for the establishment of capital-intensive industries in the country. In 1940, he formulated a five-year economic plan, which included efforts in the areas of steel works, electricity, transportation, and military ordnance.

Lacking the financial resources to implement his economic plan, Vargas used Brazil's decision to fight in World War II as a means of obtaining favors from the Allied nations. First, as early as 1940, under the argument that he had received an attractive offer from Germany, Vargas was able to negotiate with the American authorities a U.S.$45 million EXIMBANK loan that he used for the establishment of the Companhia Siderurgica Nacional (CSN), the first massive steel-producing plant to operate in Latin America. Later, after Brazil's declaration of war against the Third Reich, Vargas obtained from the United Kingdom control over a British mining company operating in Minas Gerais and the small highway connecting the iron mines to the harbor in the city of Vitoria. Adding to that another U.S.$14 million EXIMBANK loan, he created the Companhia Vale do Rio Doce (CVRD), designed to supply raw materials for the CSN. This was the beginning of the government-led transformation of Brazil into a modern economy.

Vargas also made deals to ensure that the United States would (1) facilitate the transportation of coal to the CSN, (2) help modernize Brazilian railways, and (3) buy Brazil's iron, rubber, coffee, and cocoa. In exchange for that, Brazil not only sent 25,162 soldiers to fight in Italy but also allowed the United States to establish in the city of Natal an air force base that was decisive for the Allies' strategy of retaking northern Africa.(4) Brazil received a U.S.$200 million loan to buy military equipment, a good part of which was used in the war effort. Fighting alongside American troops, 454 Brazilian soldiers died in Italy; 2,500 were wounded.

Although at first it boosted Vargas's popularity, Brazil's participation in World War II ended up undermining the foundations of the Estado Novo. As early as 1943, intellectuals and politicians from Minas Gerais had signed the Manifesto dos Mineiros, calling for redemocratization of the country. In 1944, Vargas was forced to promise free elections, to be held once the war was over. Political parties were reorganized. The Social Democratic Party (PSD) united the urban and agrarian elites with close ties to the government. The National Democratic Union (UDN) joined together the anti-Vargas forces, identified broadly with political and economic liberalism. The Brazilian Labor Party (PTB) was created as a result of Vargas's connections with union leaders and the labor bureaucracy. With the political amnesty, Luis Carlos Prestes was released from prison, and his Communist Party was allowed to emerge from the shadows of political illegitimacy.

Elections were finally scheduled for the end of 1945. Vargas's minister of war, Eurico Dutra, was chosen as the PSD candidate, supported also by the armed forces. The very popular Air Force General Eduardo Gomes led the UDN ticket and was considered a sure winner. Meanwhile, Vargas tried to manipulate the nationalist groups and the labor movement into calling for him to remain in office. His own senior aides, Goes Monteiro and Eurico Dutra, finally ousted him, in October 1945, and the interim government arranged elections for a Constitutional Assembly One month later, Dutra was elected president.

The 1945 Republic: Die-Hard Desenvolvimentismo

In September 1946, a new democratic Constitution was adopted, and the Congress reopened. This "liberal"-inspired text ended the death penalty and strengthened the rights of the individual. With Vargas's many years in power still fresh in everyone's mind, it established five-year presidential terms, with no possibility of immediate reelection.

The Dutra administration (1946-50) is widely regarded as one of the least distinguished in the history of the republic. There were no great achievements. The most important economic legacy of his term was the adoption, in 1947, of a system of selective control of imports. The new system was meant to favor imports of machinery and to restrict imports of consumer goods. These measures would greatly enhance the growth of the import-substitution industries in the following years.

The main characteristic of the Dutra years was the impact of the cold war in Brazilian political life. The Communist Party was again declared illegal, and diplomatic relations with the USSR were severed. Among the military, a clear divide emerged between the groups identified with the United States and liberalism and the groups inspired by nationalism. The liberals favored a more conservative economic policy, greater interactions with foreign capital, and less labor movement influence on government. In general, they were opposed to anything resembling Vargas, tended to favor the UDN, and often criticized traditional politics, which was seen as an obstacle to genuine alternation of the parties in power. The nationalist group, connected with the PSD and the PTB, was less concerned with the Communist threat and somewhat distrustful of foreign interference in Brazil's process of industrialization. Although with slightly different approaches, both groups supported strongly the desenvolvimentista idea as well as the military's role as the overseer of Brazilian political life.

In 1951, Vargas, now referred to as "the father of the poor," was elected to the presidency on the PTB ticket in a landslide victory. Once in power, he resumed his nationalistic plan of industrialization. In 1952, Vargas created the National Bank for Economic Development (BNDE), designed to finance industrial enterprises. In 1953, he created Petrobras, the Brazilian government-owned monopolistic oil company. His second term was, however, marked by a relentless opposition from the UDN and the liberal military. The aging Vargas was, moreover, unable to rebuild all the strong connections he had previously maintained with the agrarian and industrial elites during his fifteen-year rule. He chose instead to deepen his political base among the nationalist groups and the labor movement. Whatever remained of his support among the elites was jeopardized when his minister of labor and political heir, Jolt Goulart, convinced him to double the minimum wage overnight. In 1954, UDN leader and journalist Carlos Lacerda launched a vicious campaign against Vargas, accusing him of being a "closet leftist" and denouncing widespread corruption in his administration. Political radicalization ensued, with the pro-Vargas forces denouncing the threat of foreign "imperialism." When it was discovered that one of Vargas's bodyguards was involved in an attempt to kill Lacerda, the military rebelled against the president. With the presidential palace surrounded by troops, Vargas committed suicide. In his last note, he said he was giving up his life to join history.

Vargas was succeeded by his vice-president, Cafe Filho, who was on much better terms with the groups that had overthrown Vargas. In October 1955, Juscelino Kubitschek (PSD), former governor of Minas Gerais, was elected president, with Jolt Goulart (PTB) winning the vice-presidency. The results were seen by the opposition as a return to power by the Vargas-inspired forces. As Kubitschek had not obtained more than 50 percent of the valid votes, UDN tried to invalidate his election and impose a runoff. Facing a political crisis and military unrest, Filho resigned, alleging health problems. Speaker of the House Carlos Luz (UDN) took office and tried to block Kubitschek's inauguration. Two days later, the minister of war, Marshall Henrique Lott, ousted Carlos Luz, quelled an incipient military rebellion, and handed the presidency to Kubitschek.

The Kubitschek administration (1956-60), also known as the "JK years," proved the most fruitful period in the history of the Brazilian Republic. His personal charisma captivated the public, and his political dexterity helped to overcome the trauma of Vargas's suicide. The political situation remained calm throughout his term, which ended peacefully, with the transfer of the presidency to a UDN-sponsored candidate.

Resuming the desenvolvimentista agenda, Kubitschek launched the plant de metas ("plan of targets"), an ambitious economic plan based on targets for public and private investments. The federal government would concentrate its efforts in the areas of energy and transportation, while the private sector would move its investments into capital-goods industries and into the production of more complex consumer goods. Differentiated exchange rates further facilitated imports of machinery. Tariffs were raised to protect local producers, and new rules were designed to favor foreign firms that decided to invest in Brazil. Adding some realism to Vargas's project, Kubitschek realized that Brazil's development efforts required joint action by state-owned companies, private Brazilian firms, and major American and European multinationals. This "tripod" strategy assumed that the state-owned companies would make long-term investments in the less profitable areas (basically infrastructure), with multinationals bringing in capital and technology for the more complex consumer-goods sectors, such as automobiles or televisions, and the Brazilian firms receiving incentives to venture into areas like capital goods and the production of spare parts for the multinationals' assembly lines.

Kubitschek promised to give Brazil "(the accomplishments of) fifty years in five." The main message of Kubitschekwas confidence in Brazil's future. His decision to build a new capital city with avant-garde architects became a symbol of his administration. Kubitschek delivered on his promises and his "great (democratic) leap forward" actually worked. Industrial output increased at a rate of 10 percent a year, and Brazil became Latin America's powerhouse. An impressive network of highways was built, and the whole country was finally connected by means of Brazilian-made automobiles and trucks. Kubitschek also pioneered the idea of enhancing development in the more backward areas of the country, with the creation of the Northeastern Development Authority (SUDENE) in 1959.

The end of his administration experienced a certain degree of relaxation in terms of fiscal and monetary discipline, which led to a rise in inflation. The presidential election was approaching, and the government had no viable candidate to replace Kubitschek. The president believed that a change of the parties in power would help his comeback in 1965, so he did not get involved in the campaign. Lacking a better leader, the PSD presented the candidacy of the stern-faced Lott. The UDN endorsed the candidacy of populist leader Janio Quadros, a former governor of Sao Paulo. The charismatic candidate promised to "sweep away the dirt" in Brazilian politics, and he always displayed a broomstick at his political rallies. In late 1960, Brazilians gave him a sweeping victory.

Once in charge, Quadros proved to be highly chaotic as a statesman. His drifting economic policy did little to put the economy back into shape. His impetuous foreign policy, which included an invitation for Che Guevara to visit the country, jeopardized his UDN support. Ludicrous measures, such as prohibiting women from wearing bikinis, subjected him to ridicule. Within a few months, he was isolated in power. After a threatening speech in Congress by UDN leader Carlos Lacerda, Quadros resigned from the presidency.

The president's unexpected decision caused a major political crisis. As the legislation in force established that votes for president and vice-president would be on separate ballots, and given that there was no ban on reelection of vice-presidents, Brazilians had chosen PTB'S Goulart as Quadro's deputy. When the president resigned, Goulart was on an official visit to Communist China. The UDN and the liberal military officers said they would not accept Goulart as president. Lott and Rio Grande do Sul's governor, Leonel Brizola (PTB), supported the vice-president. A compromise was negotiated with the adoption of parliamentarism, which turned Goulart into a powerless president.

Throughout 1962, Goulart and Brizola worked together to undermine the new parliamentary system. In January 1963, a plebiscite restored the presidential system. As a solution to the growing problems in the economy, Goulart's advisors convinced him to push forward structural reforms. The purpose was to exert greater control over banks and foreign companies, nationalizing them if necessary. Labor unions were to be given more power and wages increased as a means to promote redistribution of income in the country. Moreover, the president's left-leaning clique dared to address an issue that neither Vargas nor Kubitschek had ever tried to tamper with: a significant agrarian reform. The first months of 1964 were characterized by disturbing events: runaway inflation, strikes, insubordination in the lower ranks of the military, a triumphant appearance by Communist leader Luis Carlos Prestes on television, and a radical speech by the president at a rally in front of the Ministry of War. On March 31, encouraged by Lacerda's UDN, a military coup ousted Goulart. General Castelo Branco, a World War II veteran and a champion of liberalism among the military, was made interim president. He was later confirmed in power by the Congress to serve as president for the remainder of the Quadros/Goulart term of office.

The Military Government: Desenvolvimentismo with a Vengeance

Until 1964, all previous military interventions in Brazilian politics had been relatively quick. The military either immediately installed in power a civilian leadership or else presented a candidate in elections of the sort customary at that time. The "1964 Revolution" initially came with a promise to act likewise. Its rationale was that of preemptive action to "defend" democracy from the allegedly authoritarian plans of President Goulart and his allies. Indeed, over the twenty-one years of military rule that would ensue, the military would never quite permit a total break in the democratic order. Congress was not to be closed but "purged." Elections were not to be canceled but adapted to new rules. No president was to rule as a dictator; rather, indirect elections would be held to select a new president every four (and later six) years. Non-Communist opposition parties were allowed to exist and to express "responsible" dissent. Children were taught in school that Brazil was a democracy inspired by the U.S. model, for in both countries the presidents were elected by electoral colleges.

The military's first action was to arrest and send into exile the civilian leaderships most closely associated with the Left. Goulart, Brizola, Prestes, and Pernambuco's Governor Miguel Arraes were among the most prominent figures to be forced to leave the country. Some politicians were removed from office and lost their political rights, government officials were fired, and military officers were forced to retire. Institutional Act I (AI-1) amended the 1946 Constitution, restricting individual liberties and increasing the powers of the presidency.

Eyeing the presidential election of 1965, Lacerda encouraged the military to proceed with "moralizing" purges against "corrupt" politicians and public officials. The main victim of this witch hunt was former president and then Senator Juscelino Kubitschek, who was removed from the Senate and had his political rights suspended for ten years (soon after this period was over, Kubitschek was killed in a car accident).

The year of 1965 demonstrated that the military did not feel confident enough to hand the power back to civilians. Castelo Branco had promoted a career restructuring in the armed forces much desired by the younger generation of officers. A time limit was imposed on the continuation of colonels and generals in active duty, and the military rank of marshall was abolished. With that measure, almost all the military leaders associated with either the nationalism of the Vargas regime or the liberalism of the World War II veterans were sent into retirement. The new group of commanders that emerged had a different profile. They were distrustful of civilians and of politicians, they were less capable of telling the difference between the center left and the extreme left, and they believed firmly that military rule could give to Brazil the discipline, probity, and objectivity it needed to become a powerful nation. The somewhat liberal ideas of Castelo Branco's group were progressively overshadowed by this new faith in an authoritarian form of technocratic nationalism. Branco compromised with this new right-leaning military leadership. His term of office ended up being extended, and elections were postponed. In December, the Institutional Act II (AI-2) eliminated the existing political parties and imposed the creation of a bipartisan system: progovernment politicians joined the Alliance for National Renewal (ARENA), while the opposition was gathered into the Brazilian Democratic Movement (MDB). The word party was banned.

Branco adopted an orthodox economic plan to curb inflation. An in-depth financial reform was implemented, reorganizing the Brazilian banking and creating better rules for investment and savings. Tax reforms were also adopted, concentrating financial resources in the federal government's hands. Credit was restricted. Wages were adjusted by nominal levels inferior to the rises in prices. Inflation was successfully controlled, but economic stagnation followed as a consequence.

The postponement of redemocratization and the looming recession fueled opposition to the military. Disillusioned, Lacerda then decided to organize a prodemocracy front with ex-presidents Kubitschek and Goulart. It was too late for such an initiative. In early 1967, before passing the presidency to conservative General Costa e Silva, Branco made Congress approve a new constitution, consolidating the military's grip on the power.

The years of 1967 and 1968 were a time of growing discontent with the military rule. Middle-class radicalism became stronger, and a new prodemocracy elan gave rise to numerous students and workers' protests. Fearing the situation was escaping their control, the military right wing convinced Costa e Silva to increase authoritarian rule. On December 13, 1968, Institutional Act V (AI-5) was imposed. This amendment to the Constitution temporarily closed the Congress and gave the president powers to do so again, whenever there was a serious threat to political order. The AI-5 also gave the presidency powers to take control of state and local governments, suspend political rights of specific citizens, and remove members of the judiciary. That same day, another group of congressmen was removed from office. Artists, intellectuals, and political activists were arrested. More government officials and employees, including a significant group of professors at public universities, were automatically sent into retirement. Many Brazilian public figures and members of the intelligentsia went to exile, either voluntarily or otherwise.

In early 1969, President Costa e Silva fell sick. His civilian vice-president was ignored, and a military junta took charge of the government. In October, right-wing General Emilio Medici was picked as president by the purged Congress.

As early as 1968, some leftist groups were calling for armed resistance to the military regime. The years 1969 to 1971 were tragically marked by political violence. The extreme left organized urban and rural guerrillas. In late 1969, the American ambassador was kidnapped and released in exchange for a group of political prisoners. The government waged a "dirty war" to dismantle these groups.

At the beginning of the Costa e Silva administration, the military leadership reached the conclusion that recession would undermine political support for the "revolution". A group of technocrats, headed by economist Antonio Delfim Netto, proposed that the military adopt a new strategy to resume growth. Castelo Branco's orthodox policies were abandoned. Over the next few years, measures were adopted to (1) foster consumption of durable consumer goods, with lines of credit for middle-class families; (2) make the National Bank for Housing (BNH) and private savings institutions invest heavily in middle-class real estate; (3) facilitate the rules for private firms to get foreign loans; (4) use the federal resources boosted by Branco's fiscal reform in a new government-led infrastructure investment plan; and (5) give new incentives for multinationals to increase their investments in production. Delfim NeRo's plan was basically a resumption of Kubitschek's tripod strategy with a stronger internal financial system and a very unorthodox external debt-contracting policy. The first effects were felt in late 1968. In 1969, as the leftist forces resorted to underground resistance, the middle classes were already more at ease in view of the coming bonanza. In 1970, growth skyrocketed, and President Medici found himself presiding over the euphoria of the "Brazilian miracle." In 1973, the last year of his term of office, the GDP was growing 13 percent a year.

For the 1974 presidential election in the electoral college (formed by the members of Congress), although it was evident that the military would again impose their candidate, the MDB decided to nominate Ulysses Guimaraes as a so-called anticandidate. The election was won by General Ernesto Geisel, but it nevertheless marked the resurgence of the democratic opposition. By then, the Brazilian miracle had been hit by the international oil crisis, and some problems appeared on the horizon: inflation began to grow, the consumer boom receded, investments shrank, and private firms were hesitant to get new international loans. To "keep the debt rolling," the government decided to make state-owned enterprises take the lead and finance in the international market some new ambitious projects.

President Geisel refused to adopt any conservative economic measures. Instead, he secretly prepared a bold "Second National Development Plan" (II PND), designed to propel Brazil into the final stages of industrialization. The state-led companies would be the spearhead of the II PND, with heavy investments in steel works, energy, transportation, and the petrochemical industry. Brazilian private companies would get government-subsidized credits to invest in selected areas, such as computers, chemicals, cellulose, metallurgy, and capital goods. The imbalance in current-account transactions would be met dynamically through incentives for Brazilian firms to penetrate foreign markets. The Ministry of Foreign Affairs was assigned the task of leading Brazil's export strategy.

The opposition prepared for the 1974 congressional elections by launching a campaign against social injustice. Government's policies were accused of concentrating income in the hands of the elite and the upper middle class. The idea of agrarian reform was raised again. Democracy and a return to civilian rule were proposed as a solution for the country's problems. In November, the MDB won most of the contested Senate seats and significantly increased its representation in the House. By then, it had become clear that the regime's electoral strength was in the countryside rather than in the major cities and in the less developed states of the North rather than in the more modern areas of the South.

Throughout military rule, the desire to avoid adopting an openly authoritarian regime led to a series of electoral maneuvers on the part of the government. Since presidents were elected by the Congress, it was important to maintain a safe majority for the ARENA. Electoral reforms tried to (1) restrict political publicity and (2) increase the relative representation of the northern states in Congress. Minimum and maximum numbers of representatives per state were imposed so that it would take the opposition a considerably greater number of votes to elect a representative in Sao Paulo than it would take for the government to elect a representative in the scarcely populated Amazon region. Elections for governors were also made indirect, with a state electoral college formed by the members of the state's Congress. The mayors of the state capitals were to be appointed by the governors.

All these measures immensely increased the role of local elections and the importance of each state governor building an efficient progovernment electoral machine. In the National Congress, the MDB was mainly composed of urban representatives, elected by the workers and the middle classes, whereas ARENA was dominated by groups of local politicians closely tied to their state's governors.

Although opposition to the government was growing, President Geisel maintained a firm grip on power. Of all of the military presidents, he was by far the one who emanated more authority. He was the statesman of an emerging power, with an almost bismarkian aura of history maker. Having gained his prominence not in the military ranks but as president of state-owned oil giant Petrobras, Geisel pushed the desenvolvimentista strategy to its limits. With a nationalistic approach not unlike that of Vargas, he wanted Brazil to gain control over modern technologies and free itself from excessive dependence on multinational companies. Like Goes Monteiro, he envisioned a strong country with a strong army. During his administration, the government either created or considerably boosted (1) the project for the pacific use of nuclear energy, (2) the space project, (3) the military industry, (4) the computer industry, (5) biotechnological research, (6) the aviation industry, (7) the petrochemical industry, and (8) the modernization of Brazil's system of telecommunications.

Some of those projects subsequently failed or had to be drastically scaled back, such as the nuclear project and the Brazilian military industry. The great majority, however, flourished. To the military's nationalistic project, and specially to Geisers zeal, Brazil owes things like (1) the successful airplane production firm EMBRAER; (2) the dynamic enterprise for agricultural technology EMBRAPA; (3) the thriving space program of INPE, AEB, and the CTA; (4) the development of a domestic computer industry; (5) the strengthening and diversification of activities of profitable state enterprises like CVRD and Petrobras; and (6) the vast telecom network controlled by Telebras and Embratel. As history will demonstrate--regardless of any possible moral judgment about their individual characters or actions--three statesmen stand as the great creators of the modern Brazil: Getulio Vargas, Juscelino Kubitschek, and Ernesto Geisel.

An inescapable self-defeating element was part of the military's desenvolvimentista strategy. The more Brazil grew and developed into a middle-class urban society, the harder it was for the military to control the country's destiny. Despite all his electoral gimmicks (which included using the AI-5, in 1977, to close the Congress temporarily and impose an electoral reform known as "April's Package"), Geisel was clearheaded enough to know he had to compromise. He promised a gradual redemocratization of the country. Unlike Castelo Branco, he kept that promise. In 1979, the AI-5 was revoked, a general amnesty was implemented, and the way was opened for political party reformulation. Further negotiations would lead to free elections for state governors in 1982.

General Joao Figueiredo was elected to replace President Geisel and foster Brazil's return to civilian rule. Political exiles such as Brizola, Arraes, Prestes, and the former guerrillas returned to the country. Members of the ARENA regrouped in the Democratic Social Party (PDS), while the MDB split into a moderate group (the Popular Party [PP], headed by Tancredo Neves) and a center-left front (the Party of the Brazilian Democratic Movement [PMDB], headed by Ulysses Guimaraes). Some returned exiles joined with the emerging Sao Paulo labor movement and the vast network of new grassroots civilian organizations to form the Worker's Party (PT). Brizola tried to reorganize the old PTB but failed. He then resorted to creating his own personal party, the Labor Democratic Party (PDT). Traditional Communists could not overcome the world's transformations and remained a minuscule party.

In 1979, the second oil crisis and a significant increase in international interest rates again hit the Brazilian economy. Minister of Planning Mario H. Simonsen proposed an orthodox economic policy to adjust Brazil to the new international environment and ended up being dismissed. The original architect of Brazil's miracle, Delfim Netto, replaced him and promised a new show. In 1980, Brazil's GDP grew almost 10 percent, but both inflation and the foreign debt went totally out of control. In 1981, Netto tried his hand at orthodoxy and provoked a recession. In 1982, an important election year, more relaxed economic policies were adopted. The international debt crisis, which began with the Mexican moratorium in September, found Brazil more vulnerable than ever. That was the final blow to the regime.

For the November 1982 general elections, the government passed an electoral reform imposing that votes, from the level of town councilman to that of state governor, should be cast to candidates from the same party. The PP and the PMDB merged, but the measure still favored the government. Thus, the PDS managed to win the House and Senate by a small majority. The opposition parties, however, elected the governors in the three major states: Sao Paulo, Minas Gerais, and Rio de Janeiro.

Led by Guimaraes, the opposition started the Diretas Ja, a campaign in favor of an immediate free election for the presidency Although Brazilians overwhelmingly supported the campaign (a one-million-men rally was held in Rio de Janeiro in mid-1984), the military still resisted change. A civilian ex-governor of Sao Paulo, Paulo Maluf, won the nomination as the PDS's candidate in a close dispute with two other important figures in the party. This provoked a split among the government's forces that made possible a compromise with the opposition. The PMDB then made a deal with the dissident-PDS liberal front, forming the Democratic Alliance.

This group nominated moderate Minas Gerais Governor Tancredo Neves for president and former PDS chairman Jose Sarney as his deputy. Public opinion strongly supported Neves. On January 15, 1985, the electoral college gave Neves the victory, restoring civilian rule.

One day before his inauguration, Neves fell seriously ill. Quelling the dissent among the PMDB forces, Guimaraes ensured that Sarney was sworn in as president. Thirty-six days later, Neves died.

Democracy: The Return of Liberalism?

The Sarney administration (1985-89) was a difficult period for the country. The sudden and tragic death of consensus-builder Neves was a terrible blow for the broad coalition that had just regained democracy. Neves had provided the crucial link between the center-left groups organized around Guimaraes and the center-right groups that supported Sarney. The two groups were distrustful of each other and had very different approaches to how the government should operate. The serious economic crisis and overly optimistic popular expectations only made matters worse for the new government. The half-century old desenvolvimentista strategy had reached its limits and could not work any longer. Nonetheless, to most Brazilians the crisis appeared to be simply a consequence of mismanagement by the Figueiredo administration. The removal of the military and their group of technocrats from power seemed enough to make things work again. Brazil's destiny was to resume its "historical" fast growth. Democracy should put its old-style desenvolvimentismo back on track and complement it with increases in wages and more money for social programs. With the right policies, a serious government could solve all the country's problems, just like Vargas had done in the 1930s. In fact, things just would not work that way anymore, but few Brazilians were ready to accept that.

President Sarney began his administration with cabinet members chosen by Neves. Over time, he would change that. In the first ministerial change, the president's group retained the political and social ministries, while Guimaraes appointed the members of the economic team. Nationalist businessman Dilson Funaro was made minister of finance. He was responsible for the Cruzado Plan, which for a few months in 1986 seemed to have solved the economic crisis. Inflation was drastically reduced, wages increased, and the economy resumed growth. The strategy adopted was, however, questionable: price controls based on previous statistical steadies of relative prices. It might have worked if the plan had been implemented as it initially had been intended, a shock therapy to be followed immediately by more serious fiscal measures, foreign and public debt rescheduling, and a gradual return to market rules. Instead, as elections for Congress and for governor were approaching, the administration chose to try to keep the "magic" working. If products disappeared from supermarket shelves, producers should be sued for sabotaging the country. The president's popularity was enormous. Some of his followers joined the PMDB, while others remained in the less popular Liberal Front Party (PFL). The victory of the government's candidates was overwhelming.

Immediately after the election, the Cruzado Plan was disastrously amended. Instead of reducing government expenses, the Cruzado II increased taxes; instead of negotiating reductions, it declared a foreign debt moratorium; instead of restoring market practices, it just revised the price lists. The public viewed these changes as a proof that the plan had simply been an electoral trap. The finance minister was replaced. His successor was unable to manage the backlash, and his own economic plan also failed. The remaining years of the Sarney administration and also those under President Collor de Mello were marked by a series of unsuccessful economic plans and a frequent replacement of finance ministers.

However serious the economic crisis was, Brazilian democracy kept growing stronger. The elected Congress, presided over by Guimaraes, was turned into a Constitutional Assembly and spent over a year negotiating the text of Brazil's new democratic Constitution. Public participation in the process was extensive. On October 5, 1988, the "Citizenship Constitution" was promulgated. The text was truly innovative. Among other important aspects, it (1) gave illiterate citizens the right to vote, finally incorporating all Brazilians in the political process; (2) reinforced the federation and transferred many rights and responsibilities to the state and local levels in areas such as taxes, education, and health; (3) established extensive individual rights on a comprehensive basis, creating some legal novelties such as habeas data, which gives citizens the right to have access to all information the state has about them; and (4) modified the juridical figure of the "popular action" so that any citizen was granted the right and the means to question before the courts actions taken by the executive branch. The 1988 Constitution established that presidents should have four-year terms of office and no immediate reelection. In 1991, a national plebiscite confirmed Brazil as a presidential republic.

The new Constitution was criticized by some people on two grounds: (1) it was too long and dealt with too many issues, including some that clearly belonged in regular legislation; and (2) it strengthened the worn-out nationalistic and state-led desenvolvimentista project, with too many responsibilities placed on the hands of the government and undesirable restrictions imposed on foreign investors. Both points can be argued with success. It must be understood, nonetheless, that the widespread and intense public participation in the process made the 1988 Constitution a fair representation of what Brazilian society was at that precise moment: somewhat unsure of how to change the economic structures of the country but wanting to put forward many ideas that were not allowed to prosper during the military years. Thus, the Constitution ended up including things such as environmental, nonproliferation, labor, education, health, and agrarian reform provisions--not necessarily a bad outcome. And although the chapter on the economic order could have been written by Vargas himself, the text provided that within five years, the Constitution should be revised.

The constitutional debates, especially those regarding the economic order and the length of the president's mandate, strained the government's coalition. Support for the president in Congress declined. Some parties changed names, many congressmen changed parties, and a multitude of new parties were created. A center-left group within PMDB decided to establish the Brazilian Social Democratic Party (PSDB), actually a return to the original PMDB concept prior to its reunification with Neves's moderate PP. Guimaraes could not accept the idea of leaving the party he was identified with and remained relatively isolated within PMDB. In 1989, he would run for president as a lame duck.

The last year of the Sarney administration, 1989, was a year of serious economic crisis and of growing popular frustration with the "traditional" politicians. As most politicians from the center right to the center left were identified with the administration's weak performance, the presidential race began with leftist candidates Leonel Brizola (PDT) and Luis Inacio "Lula" da Silva (PT) taking the lead. Elite and middle-class fear of the so-called Brizula monster made way for the sudden rise of Fernando Collor de Mello's candidacy. Using the facade of an obscure National Reconstruction Party (PRN), the young Alagoas governor (elected on the PMDB ticket in 1986, as everyone else) declared himself to be free from any ties to conventional politics and politicians. An updated version of Janio Quadros, Collor de Mello also claimed that he would "clean up" Brazilian politics and mercilessly hunt down all official "maharajas." As he seemed to be the only candidate capable of beating the Left, all the center to right traditional politicians ended up giving their support to his candidacy. Later that year, he would win the presidency in a close runoff against the PT-PDT-PSDB coalition, which supported Lula.

Although not brilliant, the overall evaluation of the Sarney administration is definitely positive. Despite the tragic loss of Tancredo Neves, the democratic transition was completed, and the military went back to their proper role under civilian command. The persistence of the economic crisis was certainly unfortunate, but it may have been both politically and economically unavoidable. Old ideas and structures always take time to be changed; the new ones only come after some pain. Moreover, credit must be given to President Sarney for his dedication to foreign policy topics. He restructured Brazil's relationship with its neighbors and launched the initiative that would lead to the creation of the MERCOSUR, he set a new course for Brazil's policy on international economic matters and established Brazil's strategy for negotiating external tariff reductions in the Uruguay Round, and he greatly improved the Brazil-U.S. relationship, which had been severely strained since the Geisel/Carter years due to issues like human rights and nonproliferation.

The first act of President Collor de Mello after his inauguration on March 15,1990, was to present an economic plan aimed at curbing hyperinflation. He shut down the country's financial and banking system for three days and decreed that the government would freeze all financial assets for a year and a half. Brazilians accepted the trauma of having their savings frozen, displaying a remarkable sense of patriotism. The sharp reduction in the monetary supply did curb inflation but not for long. Total indexation of prices and wages, continued exchange rate devaluations, and a rising public deficit still plagued the economy. High inflation came back.

Collor de Mello's administration inspires mixed feelings for any commentator. He had an authoritarian personality, close advisors who were less than fully qualified, and began governing with a team of naive and arrogant young ministers. Always insisting on sharply criticizing traditional politics, he was often at odds with the Congress. His popularity declined steadily after his first day in office. By the day he left the presidency, he had become a kind of national scourge.

It must be acknowledged, however, that it was the Collor de Mello administration that began the process of opening up Brazil's overprotected economy. Another economic legacy of that period was the final solution to the external debt crisis through a negotiating process carefully coordinated by economist Pedro Malan.

By the time President Collor de Mello finally realized that he had to compromise with the traditional politicians and form a new team of experienced ministers, it was too late to save his administration. A huge corruption scandal was emerging based on revelations made by his own brother. In November 1992, President Collor de Mello was impeached by the Congress.

There was not even a hint of military interference in the impeachment process. The crisis was managed smoothly. Even though the experienced Ulysses Guimaraes was not there to provide guidance (having recently died in a plane crash), new leaders, such as the renowned sociologist and senator, Fernando Henrique Cardoso, were emerging in Congress. As established in the Constitution, Vice-President Itamar Franco was sworn in as president to complete Collor de Mello's term of office.

Having the support of PSDB, PFL. and a considerable part of PMDB, President Franco ensured that the country would return to serious and stable government. Brazilians were confident of President Franco's probity and lack of ambition. He was the right man at the right time, and he knew how to choose his key advisors well. Right from the start, Fernando Henrique Cardoso was made foreign minister. After a few months, President Franco finally convinced him to accept the ministry of finance. In his new position, Cardoso formulated the Real Plan, which after more than three years is still working. The Real Plan did not impose any shock therapy but instead proposed a "market-friendly" period of six months for prices to adapt to a new index (the URV), after which the currency was to be changed. The Real Plan maintained a stable exchange rate and eliminated the economy's price indexation. There were no surprises; everything was planned in a transparent manner.

The Franco administration was also responsible for (1) a significant lowering of external tariffs, (2) a new impetus given to the privatization program, (3) the consolidation of MERCOSUR, and (4) starting the process of revising some of the economic provisions of the 1988 Constitution. Those changes, together with the stabilization plan, made economic recovery possible and fostered a surprising redistribution of income to the working class. President Franco

finished his term of office with higher popularity than any other president in Brazilian history. In October 1994, the PSDB/PFL alliance won the elections. Cardoso, an intellectual who had once been sent into early retirement and exile by the military, was elected Brazil's president.

In some ways, the alliance PSDB/PFL (which informally includes most of the PMDB) revives the same agreement that made possible the election of Tancredo Neves. This time, fortunately there have been no tragic incidents, and the basic pact remains as it was negotiated. President Cardoso's skillful command of the executive branch is complemented by Senator Antonio Carlos Magalhaes's diligent action in the Congress in such a way that one could argue that the current government has recreated the Sarney/Guimaraes pact in a way that it was allowed to work. In fact, these very same groups that in the mid-1980s were unsure of how to adapt the Brazilian economy to the end of the desenvolvimentista paradigm have matured considerably. Economic reforms are now being approved to further liberalize the economy and make it more competitive, the Constitution is being changed where it has proven to be necessary, and the role of the state in promoting development is being restructured. Direct government involvement in industrial production is giving way to a more indirect support of private enterprises and a shift of government attention to areas hitherto neglected, such as education and health. After more than a decade of crisis, the country is back on the move.

In a democratic environment, reforms have to be negotiated patiently. Restructuring the pension system or deciding exactly how to privation large (and profitable) public companies is no small task. Many countries in the world have dealt with such questions under authoritarian rule and could therefore move faster. Brazilians are convinced, nevertheless, that solutions negotiated democratically are far more stable and gratifying. If in the 1930s, the prodemocracy voices were too weak, as we approach the year 2000, Brazil's increasingly urban, middle-class society values democracy more than anything else. For today's modern Brazil, slower change is better than change made without consultation to the people's will.

It is somewhat curious to see how certain groups of the Brazilian Left are today the ones that object most strongly to any desenvolvimentista state. These groups were never really an active part of the desenvolvimentista effort and were constantly at odds with its often authoritarian political attitudes. But some socialists have always been mesmerized by the nationalistic message of state-led desenvolvimentismo. For them, whoever talks about privatization, restructuring the government bureaucracy, or lowering tariffs stands accused of the crime of being a "neoliberal" (and anyone familiar with Latin American politics knows how insulting this curse can be). This group's main intellectual mistake is to identify the wealth of the state with the wealth of the nation. For fifty years, direct state intervention in the economy worked wonders for Brazil, but now things have to change. Vargas did not create the (now successfully privatized) CSN for its own sake. He created it because he had a project for the nation in mind. State enterprises were simply a means adapted to the realities of those years. The real task of the Cardoso administration is finding new means of accomplishing Vargas's dream, not insisting on the old ones.

Sociologists commonly agree that state bureaucracies work better when they have a challenge and a well-defined task to face. Once the original job is done, state bureaucracies tend to become sluggish and inward looking. Applying this concept to the Brazilian reality, it is easy to see why privatization can seem a natural outcome of events for someone deeply committed to the history of the desenvolvimentista effort. State action was necessary to industrialize the country: now that this task is accomplished, we must let the private enterprises take the lead. The same is true with the idea of protecting so-called infant industries. There naturally comes a time when such industries must come of age. It is only a matter of determining how soon and how suddenly changes can be made.

What is necessary, at this moment, is for the Brazilian State to identify its new goals, the areas in which direct government action is needed to ensure that the standards of living for the entire Brazilian population continue to improve. An industrial policy and a boost to the Brazilian export sector are needed. These are among the economic tasks to which the Cardoso administration will have to pay close attention. But, above all, the future calls far stronger action by the state in the social area so that the inequities that still exist in the Brazilian society can be overcome.

The call for amending the 1988 Constitution so that the president, governors, and mayors can be reelected arises naturally out of all the changes Brazilian society has been through. In a democratic environment, the implementation of serious, substantive, and consistent policies requires longer terms of office. It is not a question of whether this specific administration, or the Real Plan itself, might need another few years. The point is that every democratic government will need a reasonable period of time in which to attain significant and lasting accomplishments.

The constitutional amendment that is currently being considered by the Brazilian Congress proposes that Brazil adopt a system inspired by that of the United States, in which the president is elected for a four-year mandate, after which he can run for reelection to another term. If the electorate approves of what the administration is doing, the chances are good that the incumbent will be reelected. If the administration's performance is judged to be less than adequate, another candidate will be chosen by the citizenry.

Even if that amendment is approved, as it is likely to be, the Cardoso administration would have to face an election to have another four-year term, and only after President Cardoso's days in office are over will it be possible for us to definitively assess his achievements. Will he be able to reshape Brazil's style of development and lead the country back to the high rates of growth to which it was once accustomed? Will he join Vargas, Kubitschek, and Geisel as one of the great modernizers of Brazilian history? At this point, all that can be said is that his chances look pretty good.

Notes

(1.) In Brazil, as in most Latin American countries, the word liberal is used to describe a follower of the ideas of classical liberalism. Latin Americans define as liberal a person who stands for bee-market practices, rights of property, little interference of the government in the economy, and representative democracy. It is almost impossible to understand the Latin American political debate without understanding the sharp difference between the way the words liberalism and liberal are used in that region and the connotations they have in the United States.

(2.) The Portuguese noun desenvolvimentismo is a neologism that was created to describe the Brazilian prodevelopment ideology and the government policies that arose out of it. An English equivalent would be something like developmentism. Since this word does not exist in English, I would prefer to use the original Portuguese noun. The word desenvolvimentista is the adjectival form of that word.

(3.) Tenentismo or lieutenantism was a political movement that appeared in Brazil in the 1920s and was named after its leaders, who were young officers of the Brazilian Army. Tenentista is the adjectival form of that word. The lieutenants regarded the political structures of the First Republic (1889-1930) as illegitimate and outdated. They blamed the conservative elite for the backwardness of most of Brazil and proposed modernizing reforms for the country. This movement gained prominence after a mutiny in the Copacabana military base in 1922. In 1924, it was responsible for a series of army insurrections, which culminated in the "Prestes Column" episode. The Prestes Column was a revolutionary group, formed after the 1924 Sao Paulo military insurrection was defeated. This group tried to implement a strategy of roaming rural guerrilla warfare similar to the one later adopted by Mao Zedong in the "Long March." After 647 days and 24,000 km of marching in the Brazilian backlands, the Prestes Column was finally forced to disband, its leaders going into exile. Some years later, Luis Carlos Prestes, the main strategist of the group, would become Brazil's paramount Communist leader; most members of the Prestes Column, however, subsequently joined the 1930 Revolution and gained prominence in Brazilian politics as conservative nationalists.

(4.) The Allied command even referred to the Natal Air Force base as its "springboard to victory."

Paulo-Tarso Flecha de Lima is currently the Brazilian ambassador extraordinary and plenipotentiary to the United States. Prior to his appointment to the United States, he served as ambassador extraordinary and plenipotentiary to the Court of St. James (1990-1993), as ambassador extraordinary and plenipotentiary on a special mission for negotiations with the United States on economic and commercial matters of bilateral interest (1986), and as special representative of the Brazilian government for trade negotiations (1986-1990).