Brazilian Triumphs

Some thirty years ago, dictators ruled and inflation soared. Today, Brazilians freely elect their presidents, while millions rise from poverty. The South American nation can teach the world something about building a prosperous democracy.

President Dilma Rousseff during her inauguration, Brasília, Jan. 1, 2011. Roberto Stuckert Filho/ Agence France- Presse/Getty Images

This year, the matches of the Fédération Internationale de Football Association (FIFA) World Cup will be played on pitches throughout Brazil. In a little more than two years, Rio de Janeiro will host the 2016 Olympic Games. These sporting spectacles are an opportunity for a country with regional and international ambitions to take a victory lap. Not so long ago, Brazil was a nation plagued by runaway inflation and governed by dictators. Today, it boasts a stable economy, which in size is akin to those of France, the United Kingdom, and Russia, and some 40 million Brazilians made their way into the middle class during the past decade. Meanwhile, Brazil has achieved a remarkable transition to democracy after a century of political upheaval.

The political and economic platform on which this democracy is built is particularly striking because it has so little precedent in Brazil’s history. Brazilian presidents are now elected with a wider base of public support: illiterate Brazilians gained the right to vote in 1985, when they still accounted for 20 percent of the adult population. By contrast, in 1960 and the last presidential election before the military coup, only 60 percent of adults were literate and therefore allowed to vote. Mistrust of the political aims of illiterate Brazilians, most often very poor, was one of the motives for the 1964 military coup. Brazil’s democracy today is not only more broadly rooted, it is also able to accommodate the political pressure of social policies aimed at alleviating conditions of misery in a country with some of the world’s largest income inequalities.

For much of the twentieth century, these outcomes would have been hard to imagine. The people who went on to become Brazil’s three most recent presidents had been treated harshly by the military dictatorship that ruled from 1964 to 1985. Fernando Henrique Cardoso, president from 1995 to 2003, is a sociologist who had been one of the major theorists of Marxist-influenced dependency theory and one of the early social scientists to challenge the myth that Brazil was a country without racial inequality. The dictatorship purged him from his faculty position at the University of São Paulo in 1969. Along with other fired faculty, he formed a research institute, the Brazilian Center for Analysis and Planning (CEBRAP), with funding from the Ford Foundation. When CEBRAP suffered a bombing in 1976, the São Paulo state secretary of security told the press “there are countless entities like CEBRAP in São Paulo that deserve a bomb.”

Cardoso’s successor as president, Luiz Inácio Lula da Silva, commonly known simply as Lula, is a former metalworker from São Paulo’s industrial belt who led a series of wildcat strikes beginning in 1978 that defied military rule and served as a catalyst for the creation of the Brazilian Workers’ Party, or PT. The military regime purged him from the presidency of the metalworker’s union and imprisoned him for a month during a 1980 strike calling for a forty-hour work week as well as other labor reforms. Lula’s PT became an umbrella for many stripes of opposition to the dictatorship, and pressured for a return to direct presidential elections. Lula was elected president in 2002 and was re-elected in 2006 with over 60 percent of the vote. His popularity allowed him to realize a feat no predecessor had accomplished in modern times: the election to the presidency of a protégé from his own party, Dilma Rousseff.

As a university student, Rousseff, who succeeded Lula in 2011, participated in a succession of Marxist revolutionary organizations that carried out guerrilla actions against the dictatorship. One of these organizations’ actions included a botched assassination attempt against the Bolivian officer who commanded the military unit that killed Che Guevara. Rousseff was apprehended by state security forces, tortured, and convicted by a military tribunal under the regime’s national security law. Where Cardoso and Lula chose not to look back at the dictatorship, Rousseff has instead empaneled Brazil’s first National Truth Commission. Though the 1979 amnesty law covering crimes both by and against the state remains in place, the National Truth Commission is a belated version of the reckoning that took place in Argentina and Chile in the aftermath of dictatorships in those countries.

Grand Brazil
The best way to understand Brazil’s transition from dictatorship to democracy is to understand how Brazil became a dictatorship. The armed forces took over in a coup known as the Revolution of 1964 and held power until 1985. In Brazil’s politically turbulent twentieth century, it went through six different constitutions. Before 1964, the armed forces had installed or removed presidents three times, and twice forced a change in the nature of the regime; once to create dictatorial powers for a president, and once to strip a president’s powers through the creation of a parliamentary cabinet. Beneath these repeatedly successful efforts to change Brazil’s political regime, the armed forces were a bottomless source of conspiracies and insurrections. In other words, the armed forces were one of the key political and governing arteries of the country.

The difference after 1964 is that the armed forces asserted a monopoly on political power after overthrowing leftist President João Goulart. Through this monopoly, the armed forces controlled the presidency, culled the congress, modified and eventually replaced the constitution, and arbitrated state and local elections. When the armed forces seized direct power in 1964, the new regime was pulled in contradictory directions by the army officer corps. Some officers sought a narrowly conceived course correction that would shake leftist populists out of government and engage in economic stabilization through a liberal and orthodox austerity plan. This was the view of the first military president, General Humberto Castelo Branco, who governed from 1964 to 1967. Castelo Branco and his allies identified closely with the United States, often connected by bonds formed with U.S. officers during their service together in Italy during the Second World War.

Politically, Castelo Branco’s regime purged the congress and government ministries of leftists, crushed the landless workers’ movement in the impoverished northeast, curbed labor unions, and suppressed the student movement. Economically, the new military government fought a rate of inflation that neared 100 percent through a combination of spending cuts and caps on industrial and service wages. Having cleaned house, the regime expected to restore civilian rule through direct elections to be held in 1966, in which purged politicians on the left would be disqualified from running for office.

If the coup initially brought to power officers who foresaw limits on the armed forces in government, it also aroused deeper ambitions within the armed forces which went back generations. Since the late nineteenth century, army officers had embraced nationalist modernizing projects that ranged from pursuit of the 1888 abolition of slavery to the coup that deposed Brazil’s monarchy a year later and installed a republican regime. Influenced by Comtean Positivism, these officers believed in modernization through rational planning that could solve national problems. In the aftermath of the First World War, this line of thought among officers was reinforced by the perception that only industrialized nations could persevere in modern warfare. An emerging national security doctrine thus combined the pursuit of heavy industry with a concern for building a strong central state that could integrate the vast country and secure national territory.

The scheduled 1966 presidential election never took place. Beginning in 1967, four successive military presidents, followed by one civilian president were anointed by an “electoral college” comprised of the remaining members of purged legislative bodies. The direct popular election of a president, last achieved in 1960, would not recur until 1989. The political and economic stabilization realized by Castelo Branco became the springboard for increasingly audacious developmental projects that coalesced around the vision of a Brasil Grande. Theorists in the armed forces took it as a matter of faith that their modernizing and developmental ambitions would make Brazil a world power. As General Carlos de Meira Mattos, an influential exponent of Brazil’s national security doctrine expressed in 1977, “We will be a world power if we meet our development goals for the year 2000, regardless of our vocation or desire for power. We must be prepared to exercise that power, whose geo-strategic and economic dimensions will have a global reach.”

These ambitions drew Brazil’s generals in curious directions. On one hand, they professed alignment with the United States and adherence to liberal market principles. On the other hand, they skirted market mechanisms or eschewed the United States when they believed that economic growth and national development depended on it. By the late 1970s, the Brazilian government pursued relations with the Marxist regime in Angola, as well as commercial opportunities in Libya and Iraq. In many respects, by deposing a populist president, squelching leftist movements, and winning foreign investment, the military regime was the fruit of the Cold War. But in many other ways, the regime reflected more historically rooted aspects of the worldview of military officers. The dictatorship was the full bloom of a particular culture of modernization, development, and security that had germinated in the armed forces for nearly a century.

The generals pursued both economic development and national integration, giving wide berth to technocrats and engineers in both civilian ministries and the armed forces. The pursuit of national integration was formidable. The regime partnered with Globo TV to develop a national television network supplemented in 1985 by the country’s own transmission satellite, along with early implementation of a nationally specific color transmission standard. First through Globo and eventually through other networks, this infrastructure brought the same news and entertainment programming to all reaches of the country.

The expansion of road and railroad networks was equally dramatic. The Trans-Amazonian Highway epitomized the push for national integration. Inaugurated in 1972, the road stretches westward four thousand kilometers from Brazil’s easternmost tip into the far western Amazonian region. It is incomplete, and many of its completed segments unpaved, but the projected route would reach from the Atlantic Ocean to the town of Benjamin Constant (named after Brazil’s most influential Positivist thinker) at the border with Colombia and Peru.

The Trans-Amazonian highway accelerated the deforestation of the Amazon, though the generals did not regard this as a problem: it meant the economic development of the region, as well as the intensification of settlement in regions that military strategists saw as vulnerable to foreign encroachment. State planners also viewed the highway as a means of redirecting the great migration of rural workers from the impoverished and arid northeast into new Amazonian farmlands rather than the crowded industrial cities of the southeast, such as São Paulo and Rio de Janeiro.

Massive infrastructure development projects were fueled by accelerated economic growth, and this growth was sustained by borrowing to continue to expand infrastructure. The regime’s most influential finance minister, Antônio Delfim Netto, developed a mechanism to ease credit without triggering inflation by resorting to indexation and frequent small devaluations, essentially sweeping inflation under the rug. The flood of credit helped fuel the Brazilian Miracle through which the national economy grew at an average annual rate of 11.3 percent between 1968 and 1973. Amid this growth, the generals grew confident that, as the state planning blueprint published in 1974 proclaimed, Brazil had capitalized on “the momentum the Revolution [of 1964] has sought to generate, in order to cross the frontier between underdevelopment and development.”

‘Lost Decade’
The generals’ reaction to the 1973 Arab oil embargo had disastrous consequences: committed to maintaining the high levels of economic growth upon which the regime’s popularity floated, the regime chose to subsidize oil prices through borrowing. At the time, Brazil imported half of its oil, and the cost of those imports quadrupled: the country faced a soaring balance of payments deficit and a debt burden that carried on in the belief that future growth would offset current costs.

After the oil shock, the government doubled down on infrastructure investments in order to ease dependency on oil imports. Massive projects in hydroelectric dam construction, the development of a sugarcane-based ethanol industry, and other energy projects compounded the debt. Brazil became a leading borrower of petrodollars, with the largest foreign debt in the developing world. The government and state-owned companies extended their reach into the economy, competing with private sector firms for profits that could ease its balance of payments deficit. By the end of the 1970s, nearly half of the economy was in the hands of the state—an ironic outcome for a regime that took power out of fear of the socialist leanings of the government it deposed.

The second oil shock in 1979, followed by a global recession fueled by the increase in interest rates in the United States to curb inflation, brought Brazil’s debt-fueled growth model to collapse. After the first 1973 oil shock, Brazil’s foreign debt reached $12 billion, an amount so large that the government needed to borrow simply to make payments on the debt. By 1982, Brazil owed $82 billion. Interest rates on the debt soared, and amid Mexico’s moratorium on debt payments and Argentina’s war with Britain over the Falkland Islands (Islas Malvinas), Brazil’s capacity to borrow was exhausted. The annual cost of interest payments alone was more than half the value of Brazil’s exports. The result was the subsequent ‘lost decade’ of economic stagnation and runaway inflation. In 1990, per capita GDP was lower than it had been in 1980.

The military regime’s promise that rational and purportedly apolitical planning would achieve the development aims that had eluded the country was in tatters. The regime limped along seeking to manage the financial crisis alongside a gradual transition to civilian rule. The character of this crisis and its connection to re-democratization gave shape to a particular culture of opposition that brought seemingly incompatible groups together in a new political dynamic. Business groups that had long benefitted from the regime came to see the dictatorship as an entity that was incapable of reading and responding to market signals, and wanted to reduce their market competition with state enterprises.

Their opposition took the form of promoting neoliberal reforms that would curb what they saw as the statist and ruinous policies of the dictatorship. By the early 1980s, this neoliberal opposition formed a common cause with social movements that were often leftist but which increasingly framed their demands in the language of individual human rights. The combination of neoliberal economic pressure and opposition based on the defense of the rights of the individual created a potent movement for liberalization.

Rule of Law
Over the life of the dictatorship, opposition had taken many forms. In 1968, public protests led by students and workers filled main squares and central avenues across major cities. The military’s crackdown on the protesters and its expansion of national security laws to allow for the indefinite detention of dissenters radicalized the opposition. Urban and rural guerrilla groups, many formed by radicalized university students, waged campaigns of assassinations, bank robberies, and the kidnapping of diplomats. The regime responded with a proliferation of security agencies. One of the most notorious, OBAN, was formed by soldiers and police and was funded by corporations including Ford and General Motors—this corporate U.S. support of repression followed years of training in torture and counterinsurgency techniques provided by the U.S. government. It was OBAN that, in 1970, detained and tortured Rousseff.

The guerrilla groups, whose members mostly lacked military training, were badly outmatched by a regime that confronted them through torture, disappearance, and extrajudicial executions. By 1975, armed opposition to the regime no longer existed, and popular dissent was muffled. A congressional minority party, the Brazilian Democratic Movement, placed muted pressure on the regime, but was cautious not to trigger purges of its diminished caucus. The sprawling state security apparatus nonetheless continued to voraciously seek out new targets. These could be a university valedictorian who made an unguarded address to his class, or industrial workers with past radical affiliations. In October 1975, the target was a São Paulo journalist, Vladimir Herzog, who was news director at a public television station but had once been a member of the Communist party.

Herzog died at the hands of the army intelligence agency DOI-CODI, which claimed he committed suicide while in detention by hanging himself with the belt of his prison uniform (the uniforms did not have belts). When the president of the Israelite Congregation of São Paulo, Rabbi Henry Sobel, buried Herzog in the main part of the Jewish cemetery rather than a separate plot, which would be the custom for suicides, he implicitly challenged the government’s account of the death. Cardinal Evaristo Arns held an ecumenical service for Herzog in São Paulo’s cathedral, and 30,000 students at multiple university campuses went on strike.

Herzog’s death stands out, among many others at the hands of the regime, for the public response to it. Religious leaders, student leaders, and the journalists’ union to which Herzog had belonged resolved to avoid the kinds of noisy protests the regime was accustomed to suppressing. In the place of political banners denouncing the regime or advocating for socialist revolution and the chants and pot banging of typical Brazilian political demonstrations, the public manifestations around Herzog’s death were conducted in silence. Like the work of the Mothers of the Plaza de Mayo in Argentina and the arpilleras—quilt-weavers—in Chile, whose silence defied their respective dictatorships, the protesters in São Paulo developed a powerful challenge to the regime.

The dictatorship had represented itself as the defender of public order, the family, and moral values against the forces of demagogic populism and radical subversion. The regime had always taken pains to present itself as being the rule of law, for instance putting on elaborate public performances of constitutional reform to legalize its arbitrary decisions. Brazil’s military leaders wore civilian dress, and disdained the ostentatious uniforms of neighboring dictators like Alfredo Stroessner and Augusto Pinochet. They were not, in their own way of thinking, even dictators: they were constitutional heads of state duly “elected” by an electoral college.

The protesters now turned this equation on its head. Their demonstrations were not explicitly political in that they did not demand the end of the regime, or its replacement with an ideologically different one. Instead, the protesters championed the integrity of the individual before the state and a return to a rule of law that the state itself would be subordinate to. Defense of the rule of law grew into the advocacy for liberalization that also spoke to business groups. Opponents began to challenge military rule not ideologically but procedurally: pressing for an acceleration of the civilian handover and advocating for direct presidential elections.

In 1985, a tenuous political transition took place. The armed forces held to the indirect election by the congress of a civilian president, and permitted two slates: one allied to the armed forces, and the other a slate that included Tancredo Neves, a leader of the senate opposition to the regime, as the presidential nominee, and José Sarney, who had been a leader of the pro-regime majority in the senate, as the vice presidential candidate. As the electoral college voted, a rock festival took place in Rio de Janeiro. Between performances by bands like AC/DC and the Scorpions, festival-goers kept track of the vote and cheered “Eu, eu, eu! Maluf se fodeu!” (Politely: Paulo Maluf, the defeated candidate of the armed forces, “got screwed.”)

A Program for the Poor
The most immediate experience for Brazilians in the years after the dictatorship was inflation. In 1964, the armed forces held up the foreign debt of $3.2 billion and an inflation rate of nearly 88 percent per year as evidence of the inability of civilian politicians to make difficult but rational choices. Yet the military presidents bequeathed their first civilian successor a foreign debt of $95 billion and an inflation rate of 235 percent. The new civilian leaders had to confront the economic crisis using political and governing institutions whose legitimacy had been ravaged by dictatorship.

Tancredo Neves fell ill and died before taking office, leaving the presidency in the hands of a politician long identified with the regime. Indirectly elected and not the first choice for presidency, José Sarney lacked the popular mandate to make difficult economic choices. As a result, repeated plans to curb inflation failed, and each triggered a backlash and a growing loss of credibility. At moments, between 1985 and 1994, inflation exceeded 3,000 percent, and public confidence in the capacity of the government to solve problems collapsed.

The legacies of debt and inflation left behind by the military regime devastated the public sector in Brazil. Public enterprises such as the state telephone and electrical utilities were repurposed to combat inflation by keeping the cost of public services low, while budgets for public education and health, or maintenance of roads and rail vaporized. By the 1990s, Brazilians had to wait several years to purchase a phone line that cost hundreds of dollars and offered no guarantee either of a dial tone or that a dialed number matched that of the intended recipient of the call. Interstate roads became hazardous, passenger rail service disappeared, and subway systems remained incomplete. Across Brazil, maintenance of infrastructure and of the quality of services largely disappeared.

Brazil’s debt crisis fed the economic dimensions of liberalization: inflation was tamed in 1994 and was kept low through high interest rates and reduced public spending. The federal government privatized utilities and other state enterprises. Agricultural cartels were disbanded. Where public investment faltered in areas such as road or mass transit infrastructure, large segments of public infrastructure were contracted to private concession holders.

Ironically, the center-left governing coalition that has held the presidency for the past twenty years has been a champion of liberal market reforms and privatization, in contrast with the anti-communist and pro-business military regime that had increasingly relied on central planning, and state enterprises that controlled key economic sectors. The failures of the military regime’s economic planning would inadvertently have the most profound influence over Brazil’s future by placing successive governments in a straightjacket of debt that has compelled adherence to liberal market principles and access to foreign loans and investment.

The social side of liberalization proved harder to achieve. The social movements that had been at the forefront of opposition to the dictatorship included both old and new parties on the left, notably the Workers’ Party, as well as the women’s movement, gay rights movement, black movement, and environmentalists. For all these forces, the indirect election of a civilian president was an unsatisfying transition. The judiciary, bureaucrats, the legal code, and the constitution remained legacies of the dictatorship.

As police violence against frequently middle class and affluent political opponents of the regime receded, it left in its wake widespread police violence against the poor. Most Brazilians, particularly the poor, spent an inordinate amount of their time simply contending with inflation. Little room remained for social movements to challenge social and racial inequalities, violence based on gender and sexual orientation, the rights of minorities, or environmental questions. At first blush, the new democracy offered little that was new and even less to cheer.

Social movements focused their attention on the assembly that drafted a new constitution in 1988. The constitution is in some respects a very specific document. For instance, Article 230 guarantees the right of those over the age of sixty-five to ride urban transport for free. This specificity reflects the remarkable degree to which social movements succeeded in securing the protection of a broadly defined set of human rights, including the rights to land for indigenous groups and communities descended from slaves.

By the 1990s, the consensus around liberalization among opponents of the dictatorship coalesced in two poles: a set of neoliberal economic policies that responded to the dual challenges of debt and inflation; and a set of social goals anchored in the 1988 constitution and the universal right to vote—voluntary at the age of sixteen and obligatory after eighteen. In recent decades, no one could win national office without both speaking to the role of public policy in reducing social inequality, and adhering to the liberal principles that keep inflation in check and the debt at bay.

In some respects, the results have been very unexciting. Brazil’s economic growth over the past two decades has been meager compared to many of its peers, held back by interest rates that are among the highest in the world but which keep inflation in check. As a result, public financing of the private sector remains considerable, and many private firms have merged with international ones that have access to cheaper credit and greater investment overseas. On the other hand, the social rights promised by the constitution remain a work in progress: many, particularly the urban and rural poor, lack full access to those rights, and are subject to high rates of violence by criminal gangs, the police, or, in the countryside, land-grabbers.

In other respects, the results are impressive. Cardoso’s success in taming inflation has created breathing room to focus on other dynamics of social inequality. In its wake, public understanding of racial inequalities has sharpened, allowing for new policies such as racial quotas in public university admissions and public sector hiring. Cardoso’s successor, Lula, defied his base of support among public employees to reform and reduce public sector pensions, which freed up resources for the implementation of conditional cash transfer programs that have revolutionized Brazil’s social welfare network.

Lula’s Bolsa Família (modeled on Mexico’s Oportunidades program and now one of many similar projects worldwide), provides cash supplements to poor families who keep their children in school and meet other benchmarks, such as vaccinations. Thirteen million families receive the benefit, which ranges from $30 to $60 a month per child. The program serves a long-term goal of alleviating poverty through higher educational attainment while providing immediate economic relief that has generated a proliferation of local economic activity in the communities where poor families are concentrated. Bolsa Família has contributed to the first sustained reduction in income inequality in Brazil: between 2001 and 2011, the income of the poorest 10 percent of the population increased 91 percent.

Running in Circles?
Military rule in Brazil generated utterly unrealistic expectations for economic growth and national transformation. By leaving the economy, public institutions, and political practices in chaos, it threw those expectations into severe doubt. Fifty years after the military coup and twenty-five years since the ratification of the constitution that undergirds Brazil’s new democracy, the challenges of both managing and meeting public expectations remain.

The protests that erupted across Brazil in June 2013 highlighted these challenges. They began over two unrelated concerns: a $0.08 increase in bus and subway fares in São Paulo, and the opening of the FIFA Confederations Cup in Brasília—a prelude to the FIFA World Cup. Protests over transportation costs were really protests about the rising cost of living and the difficulty most inhabitants of major Brazilian cities have in both getting around and getting by. The demonstrations at the FIFA tournament expressed unease about the costs of hosting the 2014 World Cup as well as the 2016 Rio Olympic Games. The last country to host these events in succession was Mexico, in 1968 and 1970, where a similar phenomenon occurred: Mexico’s effort to increase its international standing exposed its unresolved problems of poverty and social exclusion. In 1968, Mexico’s government massacred protesters in Tlatelolco in advance of the Olympic games, causing lasting damage to the credibility of the ruling Revolutionary Institutional Party (PRI). In Brazil, by the time the protests peaked, the protesters’ diffuse messages came together: we want schools and hospitals as good as the stadiums FIFA demands for the World Cup.

In the wake of dictatorship, Brazilians have achieved hard-fought political and economic stability, as well as the country’s most extensive, effective and consolidated democratic government. But Brazilians still pay a high cost for the generals’ developmental ambitions: the military’s efforts to solve the problems of poverty and underdevelopment actually did lasting damage to the country’s ability to overcome these very problems.

Jerry Dávila is the Jorge Paulo Lemann Professor of Brazilian History at the University of Illinois at Urbana-Champaign. He is the author of Hotel Trópico: Brazil and the Challenge of African Decolonization and Diploma of Whiteness: Race and Social Policy in Brazil, 1917-1945, and winner of the 2010 Latin Studies Association Brazil Section Book prize. His most recent book is Dictatorship in South America.