Troubled Brazil

April 7, 2017 – Volume 27, Issue 13
Can it overcome corruption, inequality and recession? By Christina Hoag

Introduction

Demonstrators in São Paulo protest the widespread corruption (AFP/Getty Images/Miguel Schincariol)  
Demonstrators in São Paulo in December 2016 protest the widespread corruption that has helped drag down Brazil's once flourishing economy. Experts say a return to prosperity will require overcoming the vast nation's economic and structural problems, including its dilapidated infrastructure, inefficient workforce and high unemployment rate. (AFP/Getty Images/Miguel Schincariol)

Only a few years ago, Brazil seemed poised to fulfill its potential as a global powerhouse. Almost as big as the continental United States and with a population of nearly 206 million, it boasted the world's eighth-largest economy. Thanks to robust economic growth and spending on social programs, millions had moved out of poverty, and the nation's middle class was growing. But plummeting demand for Brazil's commodity exports and a massive corruption scandal have plunged Brazil into the worst recession in its history. Last summer, just after Brazil hosted the first-ever Olympic Games in South America, an event meant to showcase its progress to the world, President Dilma Rousseff was impeached on charges of political malfeasance. Scores of other politicians and business officials also have been accused or convicted of wrongdoing. Now, analysts say Brazil must pursue major reforms before it can regain its momentum. Meanwhile, government plans to radically expand hydropower along the Amazon River have sparked resistance from environmentalists and indigenous peoples.

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Overview

In a country where graft seldom is punished, the sentence billionaire businessman Marcelo Odebrecht received was stunning. As CEO of the Odebrecht Group, he presided over a respected global construction conglomerate that symbolized Brazil's ability to compete with more-developed nations.

But the company's sterling reputation collapsed last March when Odebrecht was sentenced to 19 years in prison for corruption, including overseeing an elaborate kickback system that paid $64 million in bribes to secure lucrative contracts from the state oil company, Petrobras.1

The sentence has been one of the most resounding outcomes of the sweeping political corruption probe known as Operation Car Wash, which arose from a routine investigation in 2013 into the laundering of drug profits by a gas station owner and an associate in Brasilia, the nation's capital.2

In a bid for leniency, the defendants told prosecutors they were laundering much more than drug proceeds. In fact, they said, they were part of a widespread system of corporate kickbacks paid to lawmakers who had power over government contracts.

Three years later, the scandal has implicated more than 230 politicians and business executives, notably in the construction sector, and courts have imposed more than $10 billion in fines.3

The scandal comes just a few years after Brazil won acclaim as a model of economic success and social progress in the developing world. “Emerging markets have to have an example, and Brazil was that example,” says Lourdes S. Casanova, academic director of the Emerging Markets Institute at Cornell University in Ithaca, N.Y. “Brazil became a symbol.”

Marcelo Odebrecht (AFP/Getty Images/Heuler Andrey)  
Marcelo Odebrecht, head of Brazil's Odebrecht Group, a global construction firm, was sentenced to 19 years in prison in March 2016 after his conviction on charges stemming from Operation Car Wash, a sweeping corruption probe. In the last three years, more than 230 politicians and business executives have been implicated in the bribery and kickback probe that also ensnared then-President Dilma Rousseff and Petrobras, the government-owned oil giant. (AFP/Getty Images/Heuler Andrey)

But corruption and a punishing recession — the worst in its history — have kept Brazil from fulfilling its potential and prevented it from exercising a greater role in world affairs, analysts say. At the start of 2017, Brazil's gross domestic product (GDP) — a measure of a country's economic output — was 8 percent smaller than in 2014, and 12.6 percent of the workforce — 13 million Brazilians — were unemployed. January's unemployment rate was double that of late 2013.4

Now, analysts see Brazil as a cautionary tale for what can go wrong in a developing nation. The crisis is “pretty disastrous,” says Peter Hakim, senior fellow and president emeritus of the Inter-American Dialogue, a think tank in Washington that focuses on the Americas. “For a while, Brazil was looking so promising. That's what's so awful about it.”

With a population of nearly 206 million occupying a land mass almost as big as the continental United States, Brazil is the world's sixth-most-populous country and eighth-largest economy. It is also the heavyweight in Latin America, with a gross domestic product of $1.7 trillion in 2015, ahead of Mexico's $1.1 trillion. Nicaragua has the region's smallest economy, with a 2015 GDP of $12.7 billion.5

Brazil is rich in raw materials, such as iron ore and timber, and in agricultural products, including coffee, sugar and soybeans. Aircraft and textiles are among its manufacturing exports.6

“Brazil has huge potential as a great economic powerhouse,” says Monica de Bolle, a senior fellow at the Peterson Institute of International Economics, a think tank in Washington. “It's a huge country with a huge domestic market.”

Earlier this century, Brazil seemed to be on track to fulfill its oft-discussed potential. During the presidency of leftist Luiz Inácio Lula da Silva from 2003 to 2010, the economy boomed, thanks to global demand for the country's commodities.

Lula, who left office with an 80 percent approval rating, instituted welfare programs that lifted 36 million people out of poverty. According to the World Bank, the poverty rate dropped from 22 percent in 2003 to 7 percent in 2009. Officials from developing countries in Africa, the Middle East and Asia flocked to Brazil to learn how to replicate its model. In 2010, Brazil's economy grew 7.5 percent.7

A Struggling Goliath  

The spotlight on Brazil got still brighter. The country was chosen to host the 2014 FIFA World Cup soccer championship and then the 2016 Summer Olympics, a first for South America. Ten times, Brazil has served as a temporary member of the U.N. Security Council — along with Japan, the most of any nation — and has lobbied for a permanent seat to represent emerging economies. (Proposals through the years to enlarge the Security Council have met with resistance from permanent members and others for a variety of reasons.)8

But for decades, Brazil has been dogged by income inequality, ranking 16th-worst globally.9 About 30 percent of Brazilians are functionally illiterate, meaning they can read words and numbers but cannot comprehend sentences. Nevertheless, more than half of Brazil's population qualifies as middle class, and economists have long seen the country as a huge emerging market, comparable to India and Russia.10

Corruption, however, has held the economy back. Transparency International, a Swiss organization that monitors corruption around the world, places Brazil above the global average. In a ranking of 176 countries, with 1 as the least corrupt (Denmark), Brazil places 79th, tied with China and India but well above Russia, at 131st. The United States ranks 18th.11

Under Operation Car Wash, prosecutors have uncovered a system of kickbacks, the extent of which took even many Brazilians by surprise. “Brazilians always knew corruption existed, but no one ever really understood the magnitude of ties between the state political system and capitalism,” says Matthew M. Taylor, an associate professor in the School of International Service at American University in Washington who specializes in Brazil's economy.

Operation Car Wash grew to encompass some of the country's most important companies, including Petrobras, and some of its top politicians. Among them was Lula, who as president survived a 2005 scandal known as the Mensalão, in which his Workers' Party gave legislators cash payments in return for votes.12

The scandals helped plunge Brazil into recession. In 2013, when Operation Car Wash was getting underway, the economy started to slow as world demand for commodities dropped. The investigation slowed it even more. “The major drivers of the economy, the housing and construction sectors, were paralyzed,” says Mark S. Langevin, director of the Brazil Initiative at George Washington University in Washington. “Executives were blacklisted from doing business with the government. They couldn't finish projects or start new ones. If [Operation Car Wash] hadn't happened, the economy would have slowed, but it wouldn't have sunk to the depths that it did.”

The scandal rocked the political establishment. As public anger grew, Lula's handpicked successor, Dilma Rousseff, was impeached in 2016 for borrowing $11 billion from public banks to cover budget gaps, a move she said her predecessors had done routinely despite it being illegal. Her removal from office spurred many to claim she was a scapegoat for the country's reversal of fortune.13

One consequence of the turmoil has been Brazil's embrace of foreign investment as a means to jumpstart the economy. Last fall, the administration of President Michel Temer, who succeeded Rousseff, loosened regulations on foreign and private investment in several key sectors, including oil, aviation and land ownership.14

China, a key trading partner during Brazil's commodity boom, has emerged as the country's top foreign investor. Looking favorably at Brazil's growth prospects and sizable consumer market, China invested $4 billion in the country in 2016, well ahead of the United States, which ranked second with $2.5 billion. Among notable Chinese purchases were three ships from the Brazilian mining company Vale. A Chinese consortium bought the vessels for $269 million. Meanwhile, a Chinese utility acquired a 24 percent stake in an energy company from the ailing Brazilian construction firm Camargo Corrêa.15

Analysts hail Brazil's turn to foreign investment but warn that the country is significantly behind others such as Mexico and even tiny Paraguay in adopting more business-friendly laws in areas such as taxes and labor. As an example of Brazil's uncompetitiveness, they point to provisions for the oil and gas industry stipulating that foreign companies must buy equipment from local Brazilian firms. Those rules are scheduled to be rolled back for oilfield bidding later this year.16

But protectionist measures have hurt the country's global competitiveness for decades, says Riordan Roett, director of Latin American studies at Johns Hopkins University in Washington.

Hydroelectricity Is Main Power Source  

Brazil is keen to expand its energy sector. The country is the world's 11th-largest oil producer, producing enough heavy crude to meet its domestic demand.17 However, due to a lack of refining capacity for the heavy oil, Brazil imports light oil to refine into gasoline and other derivatives for domestic consumption.18

The government plans to build a series of hydroelectric dams along the Amazon River and its tributaries to provide cheap power, saying the region's vast waterways are an under-tapped resource.

As Brazil struggles to stabilize its economy and government, here are some of the questions being debated:

Can Brazil eliminate its corruption?

It was supposed to be a pioneering anti-corruption law, but during a marathon congressional session that lasted into the wee hours last November, federal lawmakers rewrote and approved a bill that would significantly dilute the power of prosecutors investigating graft.

Among the changes, the lower house watered down provisions allowing prosecutors to reach more plea deals and seize civil servants' assets in corruption cases. Moreover, instead of making it easier to bring graft cases against legislators, the lower house retained statutes of limitations that ruled out many such cases. The revisions came a week after lawmakers tried to give themselves amnesty, a move they canceled after a public outcry.19

The legislators' actions underscore the difficulty of combating corruption in Brazil. Despite the aggressive prosecutions of some of the country's biggest names in business and politics, some experts say Operation Car Wash may not ultimately do much to curb corruption because it is so ingrained in the way transactions are done in Brazil. Others disagree, arguing that Operation Car Wash is holding people of all social strata accountable and showing that the judicial system works.

De Bolle of the Peterson Institute of International Economics says she isn't optimistic that Operation Car Wash is a game-changer. “I don't see that much of a change in mentality,” she says.

Experts see several signs that attitudes aren't changing sufficiently to eliminate corruption.

Although public approval of the investigations is generally high, the resulting economic paralysis has caused many Brazilians to wonder whether Operation Car Wash has been worth the effort. Some feel that graft helped grease the wheels and enabled the system to work. “There's a sense of ‘could we put the genie back a bit in the bottle?’” says Hakim of the Inter-American Dialogue.

A worker separates coffee beans during harvest (Getty Images/Bloomberg/Patricia Monteiro)  
A worker separates coffee beans during harvest in Brazil's Minas Gerais state. Brazil is rich in raw materials, such as iron ore and timber, and crops including coffee, sugar and soybeans. Aircraft and textiles are among its leading manufacturing exports. Global demand for its commodities helped the economy boom from 2003 to 2010. (Getty Images/Bloomberg/Patricia Monteiro)

The length of the investigation, which formally started in 2014, is contributing to the public's growing weariness of fighting corruption, says Taylor of American University. “This has been a roiling crisis for three years now. Brazilians are reaching an exhaustion point,” he says.

Perhaps most important, the lawmakers' lack of action to support the prosecutions with anti-corruption laws has led some observers to worry about the political will to root out graft.

If Congress were serious about ending kickbacks, a key first step would be a law protecting whistleblowers, says Langevin of George Washington University. “An anti-corruption campaign is not in place,” he says. “Everybody's just running for cover.”

Moreover, because the investigations have ensnared politicians, some Brazilians say the prosecutions are politically motivated. For instance, former President Lula has been indicted in five corruption cases, the latest in December for allegedly orchestrating a scheme in which Odebrecht paid $22.1 million in kickbacks to secure eight construction contracts with Petrobras.20

According to prosecutors, Lula appointed executives to the board of Petrobras who would go along with the scheme and used the money to fund his leftist Workers' Party and its allies. Still Brazil's most popular politician, Lula has said he will run for president in 2018, but a conviction in any of the cases would bar him from the race.21

“The cases against him are really weak,” Langevin says. “There's no smoking gun, no evidence. They've really targeted Lula, it looks like, more for political reasons.”

Judge Sergio Moro, who is handling most of the Operation Car Wash cases, said last fall that there is “just cause” for Lula's indictments, although he added the extent of the former president's involvement in the graft cases was unclear.22

The country's electoral system also needs revamping if corruption is to be eliminated, scholars say. Brazil has a federal system with a bicameral Congress consisting of a Senate and a lower house called the Chamber of Deputies. While the president and senators are elected directly, deputy seats are a hybrid where candidates must win votes for themselves and their party against dozens of candidates. Moreover, Brazil's statewide electoral districts are huge, with some containing as many as 32 million voters. Candidates thus often resort to buying votes by slipping bills equivalent to $14 to $28 inside campaign pamphlets.23

That leads to a need for huge campaign chests, often more than parties can acquire through legal donations. Brazil also does not have a strong tradition of individual voters donating to political campaigns. Parties, as a result, rely heavily on corporate funding, although in a bid to wipe out corporate graft, the Supreme Court last year outlawed company donations to parties altogether.24

Overall, de Bolle says, Brazil's political system produces a “very cozy relationship between the public and private sector.” But others say Operation Car Wash has sent powerful messages that the justice system can punish corrupt officials.

“Brazilians are taking some comfort in that. [Car Wash] is putting some very powerful people behind bars,” Taylor says, pointing to former Rio de Janeiro state Gov. Sérgio Cabral and former Chamber of Deputies President Eduardo Cunha. “There's a nervous hope that things will get better.”

Some analysts add that while corruption will probably always exist, the well-oiled system of organized kickbacks exposed by Operation Car Wash is likely done.

“The cost-benefit analysis of corruption in Brazil has forever changed because of [Car Wash],” says Brian Winter, vice president for policy at the Council of the Americas, a Washington-based organization that advocates free trade and democracy in the region. “It's not to say corruption will disappear or even be dramatically reduced, but corruption on a massive scale will be ended.”

Can Brazil resolve its social problems?

In the 1970s, an economist came up with a term for Brazil's social landscape: “Belíndia,” for “Belgium-like bubbles surrounded by destitution worthy of India.”25 The term remains apt, with slums ringing Brazil's cities in belts of misery.

In Rio de Janeiro, nearly a quarter of the city's population, or about 1.5 million people, live in overcrowded, violence-plagued slums, known as favelas, that dot the city's hillsides.26 Built without planning, the shantytowns feature jerrybuilt brick houses; most lack running water, trash pickup and sewage lines. Just a few miles away lies one of the world's most famous beaches, Copacabana, lined with luxury apartment towers and trendy boutiques and restaurants.

Social problems resulting from vast income disparities have dogged Brazil for centuries. Ten percent of the population controls 43 percent of the wealth, while the poorest 34 percent owns just over 1 percent, according to 2012 figures. That made Brazil the world's 16th-most inequitable country in 2012, the latest year for which data are available. By comparison, Mexico, Latin America's second-biggest country, ranked 25th, and the United States 43rd, out of 145 countries.27

Analysts say the inequity is the result of the government's long-term neglect of the poor in education, small-business development and social services. After courting the poor to get elected, legislators often represent the interests of the middle class and elites since those are the classes that wield the most economic power.

“Congress is organized to benefit 30 million to 50 million Brazilians and manage the rest,” says Langevin of George Washington University.

Brazil has had success reducing poverty in recent years. Under Lula's “Brazil without Misery” welfare programs, almost one in four Brazilians, or 50 million people, receive a monthly cash payment averaging $54 a month. (The government-mandated minimum monthly wage in Brazil is about $300.28) One program is Bolsa Família (Family Grant), which gives monthly cash stipends in return for families enrolling children in school and taking them for health checkups. The programs are credited with halving Brazil's extreme poverty, those living on less than $1.90 per day, from 9.7 percent of the population in 2003 to 4.3 percent in 2013. “This stipend makes a huge difference in people's lives, and it's relatively cheap for the government,” the Peterson Institute's de Bolle says.

But analysts say more needs to be done to create economic opportunity to improve Brazilians' lives without creating a culture of dependency. Just 46 percent of Brazilian adults ages 25 to 64 have completed secondary school.29 Inadequate public K-12 education is a key area that perpetuates social inequality because impoverished youths lack the skills to attend the best universities or land higher-paying jobs, says Roett of Johns Hopkins University.

Steep Recession Grips Brazil  

Public schools are so shoddy that the middle and upper classes typically send their children to private schools, which better prepare them to enter the country's prestigious public university system, according to experts. The majority of graduates of public schools, who typically have weaker academic skills than their private-school counterparts, cannot get into public universities and often turn to private for-profit colleges.30

The government last fall announced a plan to bolster public education, mainly by offering more flexibility to students in their choice of study in a bid to make school more attractive to students and lower the 11.5 percent dropout rate. The government also said it would offer more technical high schools to teach marketable skills. Critics said the plan does not address core issues such as deteriorated school buildings, poor teacher training and methods and overcrowded classrooms.31

The poor also suffer from inadequate state-run health care, often waiting months for treatment while those who can afford it go to private doctors. The mosquito-borne Zika virus, which has resulted in some 2,500 babies born over the past year with microencephaly, or undersized heads, and other severe defects, has underscored the health system's inequities. Many of the Zika babies were born to poor mothers in Brazil's impoverished northeast, where the disease was first detected.32

Many poor parents are on lengthy waiting lists for treatment and services provided by the public health system. Meanwhile, costs are rising to treat a growing list of Zika-related impairments: breathing problems, trouble swallowing, clubbed feet, seizures, severe muscle weakness that prevents the babies from lifting their heads and behavioral symptoms such as extreme irritability.

The government has given poor families modest disability payments to help them care for affected children and mobilized campaigns to eradicate mosquitoes and raise public awareness about Zika. Meanwhile, researchers continue researching the virus.

Crime, particularly drug trafficking, is another key concern. With high poverty, little economic opportunity and weak security forces, Brazil is becoming a haven for transnational narco-trafficking driven by gangs that have expanded beyond their bases in urban slums, scholars say. “The urban violence of the south has shifted into the northeast and less developed areas,” says Taylor of American University.

In January, the government announced a national security plan calling for federal officials to take a bigger role in combating homicides and the narcotics trade.33 Still, it is unclear what that will entail. “The government hasn't had any serious policy dealing with drug trafficking,” says de Bolle.

Roett says opportunity in Brazil comes down to how much money a person is born into, as the system offers little chance of upward social mobility. “If you're wealthy in Brazil, you're fine,” he says.

Can Brazil be a global economic leader?

In one of Brazil's most dramatic reversals of fortune, the tycoon who just five years ago was ranked the country's richest man with a $35 billion fortune was jailed in February to await trial on charges that he paid $16.5 million in bribes to the former governor of Rio de Janeiro state in exchange for government contracts. After commodity prices tumbled, Eike Batista said his oil and mining conglomerate is now $1 billion in debt.34

For many observers, Batista's rise and fall epitomize Brazil's boom-and-bust story. Just when its economy appears to make progress, Brazil slides backward. One problem, economists say, is its overreliance on commodities, whose prices are subject to the whims of global markets. Another is economic mismanagement and corruption.

“Brazil needs to stop being the land of missed opportunities, because that's what it's been time and time again,” the Peterson Institute's de Bolle says.

Experts say economic progress hinges on several reforms that will require significant shifts in policy direction, such as moving away from commodity-driven exports to more finished goods and high-tech products that will enable Brazil to compete globally.

Brazil also needs to shore up its dilapidated infrastructure and improve its workforce, as well as streamline taxes and regulations, says Roett of Johns Hopkins. “Brazil is neither a productive nor a competitive economy,” he says. He points to basic improvements that could boost Brazil's competitiveness, such as upgrading highways so that trucks traversing bumpy roads don't spill a portion of their crops. Trucks are the main method of transporting goods across the vast country because railways, ports, airports and waterways remain underdeveloped.35

The Cantagalo shantytown, or favela, rises above Rio de Janeiro, Brazil's capital (Getty Images/Mario Tama)  
The Cantagalo shantytown, or favela, rises above Rio de Janeiro, Brazil's capital. About 1.5 million people, nearly a quarter of the city's population, live in the overcrowded, violence-plagued slums that dot Rio's hillsides. The favelas reflect the income disparity and other social problems that have dogged Brazil for centuries. (Getty Images/Mario Tama)

The country's public and private sectors underinvest in capital infrastructure, according to a report by the global business consulting firm Accenture. In 2014, Brazil invested 17 percent of GDP in roads, buildings and machinery, compared with 25 percent for other emerging markets. The government is addressing this problem with a $52.2 billion plan to grant contracts to companies to operate highways, ports, airports and railroads.36

The workforce also harms Brazil's competitiveness. Brazilian workers are a quarter as productive as those in the United States.37 “There's never been a commitment to investing in human capital,” Roett says. “The workforce is poorly trained.”

The country particularly lacks technical skills and managerial expertise, and labor costs have risen steadily because of government-mandated annual increases in the monthly minimum wage. In 2017, the minimum monthly salary rose 6 percent from 2016. Labor productivity, increased only 12 percent from 2005 to 2014 while labor costs doubled.38

Labor laws heavily favor employees. Among the mandates, employers are supposed to provide meals and cover transportation costs, pay a month's bonus salary at year-end, give 30 days' dismissal notice and provide 30 days' vacation per 12 months worked. Because of the extensive rights they are granted under labor laws, Brazilians also have a penchant for suing employers, experts say.39

The cost of doing business in Brazil hampers entrepreneurs as well. Due to inefficiencies in the public and private sectors, including excessive red tape, high taxes and chronic underinvestment in infrastructure, it takes 84 days to launch a business in Brazil — compared with just four days in South Korea, 29 in India and 32 in China, all competitors of Brazil, according to Accenture. And the average cost of exporting a shipping container from Brazil is $2,323, compared with $1,332 in India, $1,224 in the United States, $823 in China and $670 in South Korea.40

Despite these challenges, Brazil has success stories. São Paulo sandal maker Alpargata turned flip-flops into a worldwide fashion item in the 2000s with its Havaianas brand.41 Embraer, an aircraft manufacturer based in São José dos Campos, is a top global aviation company; Vale, based in Minas Gerais, is a world name in the mining industry; and Petrobras remains a major state-owned oil company despite its setbacks in the corruption scandal, notes Casanova of Cornell University.

Still, for a country its size, Brazil should have more global companies and a stronger private sector, Casanova says. Only seven Brazilian companies are in the Global Fortune 500, while China, whose economy is five times Brazil's, has 95.42

The government particularly needs to support small- and medium-sized enterprises so they can grow, Casanova says. The National Bank for Economic Social Development (known by its Portuguese acronym BNDES) typically finances already-large companies and infrastructure projects but should be reoriented to boost smaller companies, especially as recovery from the recession gets underway, she says.

Others agree that Brazil's companies could use help to revive the economy. With labor costs rising annually, credit lacking and consumer demand languishing because of the recession, “the prospects for the private sector really aren't that great at all,” says de Bolle of the Peterson Institute of International Economics.

As the economic and political turmoil continues, Brazilian companies are moving to other nations, many to Paraguay, which is striving to become South America's low-cost manufacturing hub. From toy to textile companies, about 80 percent of Paraguay's foreign manufacturers are now Brazilian businesses taking advantage of energy prices that are 60 percent lower and labor costs that are more than 50 percent cheaper than in Brazil.43

With unemployment rising, Brazil's Ministry of Industry, Trade and Services says it's trying to keep Brazilian businesses at home. The country has many natural advantages, including its huge population, the absence of internal racial and ethnic strife and good standing with its neighbors, that make it a natural magnet for investors, says Winter of the Council of the Americas. “People ignore Brazil at their own peril,” he says.

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Background

Portuguese Colonization

After Portuguese explorer Vasco da Gama discovered a new route to India by circumnavigating the Cape of Good Hope, the Portuguese crown was eager to capitalize on the trading riches this maritime path promised.

In 1500, the year after da Gama returned from his epic two-year voyage, King Manuel sponsored a fleet of 13 ships and appointed Pedro Alvares Cabral to lead the expedition. The fleet left Lisbon in March 1500, but just weeks later Cabral's lead ship veered off course to the west and ended up on what is now Porto Seguro in Brazil's central-eastern Bahia state.44

Much like Christopher Columbus' accidental discovery of the Caribbean islands in 1492, the Portuguese had stumbled on a vast new territory. Cabral's landing party spent the next nine days observing the natives' hunter-gatherer existence and mapping the coast. Cabral christened the terrain Vera Cruz, or True Cross, and dispatched a ship to Portugal to notify the king of the discovery.45

The news did not generate much enthusiasm in Lisbon because the territory was thought to be a large island, devoid of riches. Nevertheless, the Portuguese established trading posts along the coast, soon finding a redwood called the brazil tree, valuable as a dye and timber. The land began to be known as “Brazil” as early as 1503, and trading brazil wood for trinkets formed the main economic activity until 1535.46

To solidify its claim on the territory, the crown had to colonize it or risk losing it to other European powers. Sugarcane imported from Africa became the cash crop, and a capital was established at Salvador.

Sugar cultivation generated a high demand for labor. Colonists enslaved Indians, whose populations were being decimated by smallpox, influenza and measles brought by the Europeans. Surviving Indians fled inland and were chased by “bandeirantes,” flag-bearing colonists charged with capturing Indians. In the process, these colonists explored much of Brazil's interior and sought gold and other riches.

Facing a decimated Indian population and resistance from Jesuit missionaries trying to help the natives, the Portuguese turned to Africa for labor. By 1580, some 2,000 African slaves a year were arriving in Brazil. Their labor helped make Brazil a world sugar power from 1600 to 1650.47 But competition from sugar plantations in Spanish, English and Dutch colonies in the Americas sent Brazil's industry into decline in the late 17th century.

The discovery of gold in 1695 in today's Minas Gerais state boosted Brazil's fortunes, sparking a gold rush and the first major wave of immigration. Over the next six decades, some 600,000 Portuguese and other Europeans settled Brazil's interior.48

In a bid to prop up its own ailing economy, Portugal in the late 18th century reasserted control over its colony, which was growing increasingly wealthy due to tobacco, cattle ranching and gold mining. Brazil's colonial elites, however, bristled at Lisbon's moves, including the creation of monopolistic trading companies and an overhaul of the colony's administrative structure that caused Brazilian laws to favor the mother country.49

Brazilian Independence

Ironically, Brazil's independence movement was spurred by the monarchy. In 1807, French emperor Napoleon Bonaparte invaded Spain and Portugal, causing the latter's royal family and 10,000 citizens to flee to Brazil. After settling at Rio, Prince regent Dom João VI, ruling in place of his mentally incompetent mother, Queen Maria I, wasted no time in installing European-style amenities, including a theater, orchestra and newspapers. By 1822, Rio's population had doubled to 150,000.50

In 1821, political upheaval in Portugal pushed João VI, who had become king after his mother's death, to return to Lisbon and leave his son Pedro as regent in Brazil. The new Portuguese parliament soon returned Brazil to colonial status. In 1822, an angry Pedro declared Brazil's independence and was crowned Dom Pedro I, emperor of Brazil.51

His reign lasted just nine years. After a costly war to prevent the secession of present-day Uruguay and growing political dissension, Pedro abdicated and returned to Portugal, leaving his 5-year-old son, Pedro II, as future emperor. For the next nine years, regents ruled Brazil until Pedro turned 14.52

In the following decades, Brazil debated how it was to be governed. Its wealth, meanwhile, was growing from coffee, rubber, and cotton exports, which led to the construction of railroads and other infrastructure. As with sugar, the coffee plantations relied on slave labor. Although British pressure had led Brazil to end the slave trade in 1831, the government did not enforce the law, and an estimated 712,000 slaves arrived during the 1830s and 1840s. Slavery was finally abolished in 1888 after increasing international pressure.53

In the wake of abolition, plus a costly five-year war to repel an invasion by Paraguay, Pedro II lost the support of key allies. In 1889, the military staged a bloodless coup and the royal family fled to Portugal.54

Early Republic

The military government promulgated a new constitution in 1891 that declared Brazil a federation of states. Over the next four decades, the country's first presidents hailed from powerful coffee oligarchies as a huge influx of immigrants arrived, largely from Portugal, Italy and Spain, but also from Japan, Syria and Lebanon. Drawn by the coffee industry and opportunity in the new republic, some 2.7 million immigrants arrived in Brazil between 1872 and 1910.55

This new urban class challenged the domination of the coffee producers, and political unrest followed. In 1937, with a worldwide depression collapsing coffee prices, the military overthrew the elected government and installed Getúlio Vargas as dictator-president. Vargas, an authoritarian populist, implemented protectionist policies and oversaw the modernization of Brazil. But in 1945, with labor unrest and opposition against the dictatorship growing in favor of an elected president, the military again intervened and ousted Vargas to return the nation to an elected presidency.56

In the post-World War II years, inflation eroded wages and caused popular discontent. This created a path for Vargas to return to power by winning the 1951 presidential election. During his term, he nationalized the oil industry, creating the state company Petróleos Brasileiros (Petrobras), but industrial strikes, corruption and a decision to double the minimum wage weakened him politically. In 1954, with a military coup looming, Vargas killed himself.57

As fertility rates rose (an average 6.28 children per mother by 1960), the 1950s witnessed rapid population growth and rural migration to industrialized urban centers.58 Faced with a housing shortage, the migrants built shantytowns on city outskirts. The youthful population also outstripped the capacity of public schools and health care, setting the foundation for a vast gap between haves and have-nots.

In the late 1950s, President Juscelino Kubitschek embarked on an ambitious development plan that included creating a national automobile industry and building roads, electricity plants and a new inland city, Brasília, to serve as the nation's capital. Although the plan lifted the economy, Kubitschek's successors were saddled with the bills for his “Program of Goals.” Inflation started climbing in the early 1960s. A bleak economy prompted the military to depose President João Goulart in 1964.59 Military chiefs also were unhappy with Goulart's leftist measures, such as giving the vote to illiterates, allowing enlisted soldiers to unionize and permitting the expropriation of underused properties.

Unlike its previous takeovers, the military did not immediately relinquish power to civilians. Instead, a succession of five generals ran the country over the next 21 years. By 1969, more than a dozen guerrilla groups — largely Marxists, but also liberation theologists and radical opponents to the dictatorship — had sprung up in opposition. The government responded with repression, including the arrests and torture of dissenters, press censorship and spying. By 1974 it had defeated the armed groups, including the Comandos of National Liberation and the Revolutionary Armed Vanguard.60

The economy flourished under authoritarian rule, as foreign investment, notably in the automotive sector, increased and exports diversified beyond coffee. Inflation dropped from 92 percent in 1964 to 28 percent in 1967, and GDP grew an average of 10.9 percent over the next six years. Much of the economic expansion, however, was contingent on foreign loans and imports such as oil, which made up 43 percent of Brazil's imports by 1980.61

In the wake of a 1979 oil price increase and a subsequent rise in interest rates globally, Brazil's foreign debt ballooned to $100 billion, from $3 billion in 1964. Inflation hit triple digits, and Brazil plunged into recession in 1981.62

Democracy Returns

The mass urbanization of society, which started in the 1950s and resulted in profound social inequality, coupled with dissatisfaction with the military's handling of the economy, led to political movements that pushed for a return to democracy. In 1985, the military handed control of the country to a civilian, Tancredo Neves, elected by the electoral college. But he abruptly died and Vice President José Sarney succeeded him.63

Sarney unsuccessfully tried to tame inflation with a new currency, price freezes and a minimum wage indexed to inflation, as well as political reform through a new constitution. In 1989 the first free presidential elections were held in three decades. Fernando Collor de Mello, who hailed from a powerful northeastern family, won on a platform of neoliberal economics and anti-corruption.64

Collor de Mello's first initiative was to tackle inflation by freezing savings accounts. He then fired thousands of federal workers, slashed tariffs and privatized state assets, all accomplished mainly via decree. By 1992, his backing had dwindled, and he resigned just hours before a Senate vote to impeach him on corruption charges.65

Minister of Finance Fernando Henrique Cardoso, an academic who had turned to politics, was elected president in 1994 on the strength of his economic plan that had started to yield results. During his two terms (1995–2002), Cardoso helped stabilize Brazil's economy and eliminate its chronic hyperinflation (from 2,489 percent in 1993 to 4 percent in 1997) through a series of liberal reforms and privatizations. But the changes did little to alleviate poverty, and by the end of his second term his popularity had plummeted amid the onset of recession.66 That set the stage for the presidential triumph of labor leader Lula, who had run unsuccessfully for president three times as the Workers' Party candidate.

Brazilian President Dilma Rousseff (Getty Images/Mario Tama)  
Brazilian President Dilma Rousseff delivers her farewell address after her impeachment in August 2016. Handpicked by President Luiz Inácio Lula da Silva as his successor, Rousseff was removed from office for illegally borrowing $11 billion from public banks to cover budget gaps. Vice President Michel Temer, who replaced her, is trying to jumpstart the economy by loosening regulations on foreign and private investment in several key economic sectors. (Getty Images/Mario Tama)

Under Lula, Brazil's economy boomed. Durable consumer goods manufacturing, construction, financial services and consumer credit, and commerce all grew. Exports of agricultural and mineral products, in concert with global demand led by China, increased as well. The expansion led to lower unemployment and social inequality and a rise in internal consumer demand. Inflation was halved, from 12.5 percent in 2002 to just under 6 percent in 2010.67

A key part of Lula's economic strategy was “state capitalism,” in which the government took minority stakes in private companies and projects as an economic stimulus. It also expanded social programs such as the Bolsa Familiar cash aid program that bolstered the poor's living standards.

Barred from seeking a third consecutive term under Brazil's constitution, Lula in 2011 passed the presidential baton to his handpicked successor, his chief of staff Rousseff, a former Marxist guerrilla who was tortured while imprisoned under the military dictatorship from 1970 to 1973.68

Brazil's first female president, Rousseff continued Lula's policies but increased the government's interventionist role in the economy, which was reeling from the global collapse in commodity demand. She narrowly won a second term in 2015 but soon became enmeshed in Operation Car Wash.

Rousseff denied knowledge of the kickbacks, but because she was chairwoman of the Petrobras board from 2003 to 2010, many doubted her credibility. Rousseff's political support suffered as a result.69 As more corporate executives and politicians were arrested, the economy became paralyzed and the recession deepened.

In 2016, just after the Summer Olympic Games were held in Rio de Janeiro, Rousseff was impeached in August for procuring loans from public banks to cover budget deficits, and Vice President Michel Temer assumed the presidency until the 2018 election.

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Current Situation

Sputtering Economy

Although signs of an anemic recovery are emerging, Brazil's deep recession continues. Analysts say economic activity in both the private and public sectors remains weak amid fears of further fallout from Operation Car Wash.

Moreover, unrelated investigations are exposing graft in other places. In March, prosecutors arrested more than two dozen people, alleging officials at Brazil's two biggest meatpacking companies bribed food sanitation inspectors to approve contaminated meat. Analysts say the scandal could jeopardize Brazil's $12 billion exports of poultry and beef.70

The recession is squeezing public coffers, resulting in months-long delays in paying civil servants, including teachers, police officers and firefighters, as well as pensioners. The recession also is contributing to supply shortages in hospitals and affecting other social services.

Many of Brazil's 26 states are in dire fiscal straits due to overspending, high borrowing from federal banks and overly generous tax breaks awarded during the boom years of the early 2000s.71

The financial situation in the states of Rio de Janeiro, Minas Gerais and Rio Grande do Sul is especially serious, with the latter declaring “a state of financial calamity” in November. Despite an $850 million federal emergency loan to stave off bankruptcy last summer, Rio de Janeiro state has money only to cover salaries until mid-2017.72

A homeless man sleeps outside Maracana Stadium (AFP/Getty Images/Vanderlei Almeida)  
A homeless man sleeps outside Maracana Stadium in Rio de Janeiro. Since the iconic soccer venue hosted events at the Summer Olympics and World Cup it has fallen into disrepair along with many other Olympic buildings. Rio de Janeiro state is among several Brazilian states in dire economic straits. Despite an $850 million federal emergency loan to stave off bankruptcy last summer, Rio de Janeiro state has money only to cover salaries until mid-2017. (AFP/Getty Images/Vanderlei Almeida)

Last year, the state declared a fiscal emergency weeks before the Summer Olympics so it could borrow federal funds. Private companies and the city of Rio de Janeiro, which was in a much better financial position than the state, financed much of the Games' $4.56 billion cost. Many of the Olympic buildings, including athletes' housing, a swimming pool, stadium, handball arena and broadcast center, are boarded up despite officials' promises not to leave any “white elephants.” Mayor Marcelo Crivella says the city is on an austerity budget.73

Brazil's financial crisis has led to a breakdown in public services. In early February, police demanding higher wages and better working conditions in the southeastern state of Espírito Santo found a way to circumvent a law prohibiting strikes by law enforcement: Their families blockaded police stations, preventing them from leaving to patrol streets. Looting, street muggings and other types of crime spiked, with homicides rising from four in January to 143 over the nine days of the police work stoppage.74 The impasse largely ended when President Temer called in troops to patrol the streets, airlifted the officers out of the stations and consented to considering raising their base monthly pay of $850.75

The federal government has little choice but to bail out the states, analysts say. In November, Finance Minister Henrique Meirelles said the federal government would use revenue from the repatriation of Brazilians' undeclared foreign income and holdings to help the bankrupt governments.76

The debate now focuses on whether the federal government should impose austerity measures on the states. In late December, Temer vetoed a bailout bill after legislators stripped out cost-cutting mandates, such as salary freezes, increased pension contributions and privatizations, in return for debt relief.77

However, a month later the federal government reached a deal with the Rio de Janeiro state government, allowing it to suspend its debt payments for three years in exchange for budget cuts and tax increases. Meirelles said the plan, if approved by federal and state lawmakers, could be a model for other states, although critics warned that it simply postpones Rio's day of reckoning.78

Faint Progress

The International Monetary Fund forecasts that Brazil's economy will turn the corner this year, but just barely, growing 0.5 percent. Rises in commodity prices, including iron ore, soybeans, corn and oil, will help. Commodities make up about half of Brazil's exports.79

Although analysts stress the economy has a long way to go, signs of recovery are surfacing. Foreign investment surged to $78.9 billion in 2016, up 6 percent from 2015, as investors anticipate a more favorable investment climate under Temer. The Chinese utility State Grid bought a majority stake in the Brazilian utility CPFL Energia, while Britain's Jaguar Land Rover Automotive opened a $296 million factory in Rio de Janeiro state.

Investors say the country is too big a market to discount. “[Brazil] is a strong economy, and once it shakes off its troubles it will go back to having an economic rally again,” said Hanno Kirner, executive director of strategy at Jaguar Land Rover. “It has got resources, it has got a young dynamic population. It has got everything in the long term.”80

In February, Swiss food multinational Nestlé announced plans to build an $86 million Purina dog food plant in São Paulo state, seeing a huge consumer market for 75 percent of the plant's output and an ideal location to export the remainder to surrounding South American countries.81

Over the past year, Brazil's currency, the real, has strengthened 20 percent against the U.S. dollar, and the stock market has surged 37 percent, buoyed by Temer's more business-friendly government than Rousseff's. Investors have been encouraged by the willingness of Temer's administration to tackle some necessary but politically unpopular reforms. The 76-year-old constitutional lawyer has said he is not planning to seek another term and thus is not concerned about currying favor with voters by pursuing “fiscal populism.” His public approval rating stands at just 15 percent.82

He scored a major victory in December when he pushed through Congress a 20-year cap on public spending, the cornerstone of an austerity program to rein in a growing budget deficit.83

Next on Temer's agenda are plans to simplify the country's complex tax code, liberalize labor laws that deter hiring, cut pension costs by raising the retirement age for public workers from 54 to 65 and improve the public school system by raising graduation rates to produce a more competitive workforce.84

Analysts say getting those reforms through Congress will be an uphill battle. Temer may not be worried about re-election, but legislators are. “I don't know if the government has the legitimacy to do these reforms,” says Langevin of George Washington University.

Going forward, the economy also may not get much of a lift from Brazil's sprawling companies, particularly those in construction, that have been significantly weakened by the corruption scandal. The Odebrecht Group has shed nearly 60,000 of its 180,000 employees while its revenues have plummeted 50 percent since the investigation began.85 “It's been banned from doing government work. It will be a shadow of its former self,” Taylor of American University says.

The outlook for Petrobras is a bit more optimistic. The company has a new CEO, Pedro Parente, who has downsized the workforce, revamped its governance and announced the sale of $40 billion in assets over the next decade. Last fall, 11,700 employees agreed to voluntarily leave, and Congress approved allowing foreign companies to take over offshore oil fields.86

“Petrobras is a fifth of its size at its peak in 2008–09. It's going to be a very different company,” says Taylor.

Corruption Fallout

Brazil's ongoing corruption investigation is turning global as prosecutors in several countries undertake their own probes of the Odebrecht Group's bribery schemes. In February, a Peruvian judge issued an arrest warrant for former President Alejandro Toledo, who is accused of receiving $20 million in bribes from the construction giant for infrastructure contracts, including a highway connecting Peru and Brazil.87 In Colombia, prosecutors said President Juan Manuel Santos' 2014 campaign may have received a $1 million contribution from a third party linked to Odebrecht, prompting Santos to call for an investigation.88

The expanding investigations come on the heels of Odebrecht's agreement in December to pay $3.5 billion in global penalties after the U.S. Department of Justice revealed that the construction multinational had a secret department tasked with funneling bribes totaling $800 million to government officials in 12 countries in Latin America and Africa.89

The widening scandal has caused more embarrassment for Brazilians. “Brazil's international prestige has just melted,” says Hakim of the Inter-American Dialogue.

Brazil's own investigation is set to expand significantly with the public release of details from a wave of plea bargains reached last year between prosecutors and dozens of Odebrecht executives in which defendants received more lenient sentences in exchange for their testimony. The plea agreements are believed to implicate top politicians in Brazil and other countries, possibly including Temer, who has been mentioned in other plea bargains but never charged. A court could remove him if evidence surfaces of illegal campaign funds that he has long been accused of receiving. Temer has denied any wrongdoing.90

“I would say that the new plea agreements could allow the Car Wash operation to double its size in the future,” Deltan Dallagnol, the federal prosecutor in charge of the operation, told The Associated Press.

Dallaganol said no end to the investigation is in sight, and he vowed that he and Judge Moro, the other key figure in the investigation, will continue despite significant political pressure from legislators to scale it back or drop it.91

In the meantime, the nation waits for further revelations from the plea bargain testimony and the political fallout that will cause, experts say. “People are worrying about the next shoe to drop,” says Winter of the Council of the Americas.

Operation Car Wash promises to be front and center for some time because prosecutions will take time, Winter says. “Winding down the investigation will allow some degree of stability to return, but the trials will last years,” he says.

The scandals are having a spillover effect on politics. Underscoring public discontent with the political class and system, Brazil's two largest cities inaugurated outsiders as mayors in January: Joao Doria, a São Paulo millionaire businessman, and Crivella, an evangelical Protestant bishop in Rio de Janeiro. Both men had defeated allies of the president, and Doria also defeated the incumbent.92

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Outlook

More Political Uncertainty

The near-term outlook for Brazil pivots on the October 2018 presidential election, analysts agree. So far, no candidates have emerged as overwhelming front-runners, although Lula, 72, has said he will run as the Workers' Party candidate.

Still, even if he avoids conviction on the five corruption indictments pending against him, he may not have the popular support to win. A December poll by São Paulo pollster Datafolha put Lula as the front-runner with just 25 percent support and Marina Silva, his former environmental minister who would run for her newly created party Sustainability Network (REDE), in second place with 15 percent.93

A fragmented race could boost Lula into a second-round runoff between the top two vote-getters, but that may not be enough to net him the presidency, says Taylor of American University. (Brazil's presidential election system calls for a second runoff election between the two top contenders if no candidate wins more than 50 percent.)

That could benefit Silva, an Afro-indigenous former rubber tapper from the Amazon who is supported by a strong evangelical movement. The December poll had Silva beating Lula by 9 points in a runoff.94

However, experts note that with such scant support for the two leading contenders, the electoral landscape remains an open field. “No one knows who will be the next president,” says Hakim of the Inter-American Dialogue.

Full economic recovery and long-term growth, economists say, will depend on whether the new president has the popular support and political will needed to tackle unpopular but necessary reforms, such as restructuring the generous pension system and the byzantine tax code.

Although the Temer government has started to implement some reforms, such as opening Petrobras to more private investment and streamlining business regulations, there is no guarantee the incoming leader will be of the same mind-set.

“I see a very large chance that a new government may not continue these reforms,” de Bolle of the Peterson Institute of International Economics says.

Others, however, say Brazil has no choice but to open up its economy. “By 2020, it'll be a more liberal country in the economy,” Langevin says.

Casanova of Cornell University says weaknesses in the private sector pose another problem. “The big private-sector companies are dismantled, and there is no strong private sector,” she says. “I don't know how the country is going to recover.”

As the political landscape evolves, Brazil's economic fortunes will continue to depend on commodities. If world demand and prices recover, that could spur a revival in government spending on public infrastructure projects and thus help restore economic growth. “If the price of oil goes up, everything will be all right again,” Johns Hopkins University's Roett says.

Absent that spark, observers note that recovery of Brazil's private sector may lag for some time, as it was never strong to begin with and has been badly harmed by the recession and the weakening of consumer demand.

Experts agree that for the foreseeable future, Brazil will continue to be an underachieving country whose potential will be much talked about but not fulfilled.

“What has happened over the past four years has been a huge blow to Brazil. I'm pretty pessimistic about what's coming,” says Winter of the Council of the Americas. “They'll move out of recession soon, but getting back to reducing poverty and to growth of 3 to 5 percent won't be in the short term. Deep structural issues need to be addressed.”

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Pro/Con

Should Brazil have a permanent U.N. Security Council seat?

Pro

Mark S. Langevin
Director, Brazil Initiative, Elliott School of International Affairs, George Washington University. Written for CQ Researcher, April 2017

The United Nations Security Council should be expanded, and Brazil should be granted a permanent seat. Brazil was an original member of the first Council of the League of Nations following World War I.

During the establishment of the United Nations, U.S. President Franklin D. Roosevelt pushed for a six-nation U.N. Security Council, including Brazil. Roosevelt's untimely death put Brazilian ambitions on hold.

A permanent Security Council seat remains the holy grail for Brazilian officials, but even temporary membership has played a central role in the formation of the nation's foreign policies. Brazil has served as a frequent rotating member on the Security Council and is well-known in U.N. circles as a constructive voice for moderation and consensus building. Brazil participates in the G-4, along with Germany, India and Japan, to advocate for seats on the Security Council.

Moreover, Brazil's longtime leadership role in the Group of 77 developing nations and its more recent innovative, multilateral engagements with the BRICS nations (an association for five emerging economies) and the IBSA Dialogue Forum (India, Brazil and South Africa) provide a compelling argument that Brazil is one of a handful of member-states that could make the Security Council more representative and effective.

Brazil's notable stature at the United Nations, its demonstrated diplomatic capacity to work with many different member-states to open up lines of dialogue and even forge consensus, and its experience as a rotating member of the council provide ample evidence to make the case that Brazil, along with the other G-4 member-states, should be granted Security Council seats. That would make the institution more representative and better positioned to confront 21st-century collective security challenges.

These impressive credentials, however, are insufficient to move existing council members to agree to expansion. If Brazil wants to realize this national goal, its political leaders must pay more of the costs of collective security and expand the nation's capacity to respond to humanitarian emergencies, such as the Syrian refugee flows.

Brazil must also consider its current political distance from the United States, especially in terms of its General Assembly votes, given the U.S. strategic partnerships with all nations of the G-4 except Brazil. Today, the world needs Brazil's special voice and vote on those multilateral matters at the heart of the struggle for peace and prosperity for all.

Con

Riordan Roett
Director, Latin American Studies Program, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University. Written for CQ Researcher, April 2017

Brazil has always aspired to greatness but has failed to achieve it. Brazil is a strong advocate of “soft power,” such as peacekeeping and transferring agricultural technology to poor countries in Africa.

But “hard power” is not in the Brazilian elites' DNA. Brazil will never commit troops to geopolitical missions such as those in Iraq or Afghanistan. Respecting sovereignty, and not interfering in the internal affairs of its neighbors, is a paramount belief of the foreign policy elites.

Brazil also faces frequent social and economic internal crises. The elites fail to understand that the world powers have reasonably stable political systems — democratic or authoritarian. The G-7 nations also have advanced educational and health standards. Deep disparities in educational levels prevent Brazil from becoming a competitive or productive economy. Its economy is still based on the export of commodities and minerals.

It has never fully industrialized and produces very little that would be attractive on world markets. Therefore, it is always the victim of swings in international prices for iron ore, coffee, sugar, etc. And it remains a closed economy in terms of world trade. Unproductive firms in Brazil are not allowed to fail.

Brazilians were very disappointed when President Barack Obama visited India and publicly endorsed it for a seat on the U.N. Security Council. He did not do so when he visited Brazil. The foreign policy elites in Brazil don't seem to understand that India is an important geopolitical player in Asia. It has difficult neighbors — Pakistan and China — and it is a nuclear power.

That gives India a global status that is very different from that of Brazil. Brazil is not a nuclear power; it does not have any border disputes with its neighbors; it does not have a terrorist threat or jihadists within its national territory. Geographically, it is far removed from the major theaters of world politics.

Brazilian leaders must understand that given the country's relative isolation in world politics, their main challenge is to address inequality and underdevelopment within their own borders. They must improve the conditions needed to be competitive and productive economically, and they must find a formula to achieve political stability. Then, the country might receive the respect it so desperately wants from the global players in world politics.

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Chronology

 
1500–1888Europeans colonize territory that becomes Brazil.
1500Portuguese nobleman Pedro Álvares Cabral steers off course during a voyage to India and lands at Porto Seguro. He claims the territory for the king of Portugal.
1700sDiscovery of gold spurs large-scale European settlement.
1808Fleeing Napoleon, Portugal's prince regent, Dom João VI, arrive in Rio de Janeiro, transforming the city with business and culture.
1821Dom João returns to Lisbon after Napoleon's fall, leaving his son Pedro I as prince regent.
1822Pedro declares independence from Portugal, forms the Empire of Brazil and rules as emperor for nine years before unrest forces him to abdicate in favor of his 5-year-old son, Pedro II.
1840Fourteen-year-old Pedro II takes over after nine years of rule by regents.
1888Brazilian slavery is abolished.
1889–1963Power swings between civil and military governments.
1889A republic is formed after a military coup backed by landowners upset about the end of slavery.
1930Military installs Getúlio Vargas as president in a coup. He retains power until 1945.
1945Another coup ousts Vargas, leading to a period of democratically elected presidents and economic growth.
1960President Juscelino Kubitschek moves the capital from Rio de Janeiro to a newly made inland city, Brasilia.
1964–1984Repressive military dictatorships seize power.
1964Brazilian military overthrows President João Goulart after he attempts socialist reforms; five generals rule for the next 20 years.
1968Guerrilla movement starts, causing the government to suppress dissent through arrests, torture, disappearances and killings over the next decade. Future President Dilma Rousseff, a Marxist guerrilla, is arrested and tortured.
1985–PresentDemocracy takes hold amid economic struggles.
1985With inflation soaring, the military passes power to Tancredo Neves, a civilian, but he dies days before his inauguration.
1988Brazil adopts a new constitution.
1990Fernando Collor de Mello is the first popularly elected president in 30 years.
1992Collor de Mello, facing impeachment, resigns.
1994Fernando Henrique Cardoso is elected president and implements an austerity plan to rein in inflation and government spending.
2002Labor leader Luiz Inácio Lula da Silva, a founding member of the Workers' Party, is elected president. He implements a social program that lifts millions out of poverty and supports big business, sparking economic growth and talk of Brazil rising onto the world stage.
2011Rousseff, a Lula acolyte, becomes Brazil's first female president.
2014A probe reveals massive graft between business and politicians; sending the nation's economy into a nosedive.
2015Rousseff starts second term after narrow re-election victory.
2016Rio hosts the Olympics Games, a first for South America, as Rousseff is impeached.
2017Brazil endures its worst recession as interim President Michel Temer tries to jumpstart the economy…. Olympic venues deteriorate as nation struggles to find uses for stadiums, athletes' village.
  

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Short Features

“We see these projects as a disaster.”

Brazil's environmental and indigenous-rights activists scored a key victory last summer when the government denied permits for the construction of the $9.4 billion São Luiz do Tapajós dam in the Amazon basin, a joint Brazilian-European project slated to have been the world's sixth-largest hydroelectric dam.1

In its decision, Brazil's environmental institute ruled that the consortium had not presented enough evidence about the social and ecological effects of the 8,000-megawatt dam, which would have flooded 145 square miles of Munduruku tribal ancestral land.2

The win, however, may not amount to much for dam opponents. The Brazilian government has given no indication it is backing off its strategy of harnessing the Amazon's prodigious water resources to meet the country's energy needs. Brazil's National Energy Plan calls for as many as 100 dams mostly along tributaries throughout the world's largest rainforest.3

“Let's not forget that in the developed world almost 70 percent of the hydro potential has already been exploited, whereas here in Brazil, 70 percent of our hydro has not been explored yet,” said Luiz Augusto Barroso, president of Empresa Pesquisa de Energética, the government's energy-planning agency. “It makes sense for the country, and it's a resource that benefits society.”4

Activists argue that the government's plan is shortsighted. Not only do the dams wipe out indigenous tribes' habitats and disrupt one of the planet's most diverse biosystems of fish, animals and plants, but deforestation contributes to climate change when forested areas are flooded. Trees absorb carbon dioxide in the atmosphere while rotting vegetation in the dam reservoirs produces methane. Higher levels of both gases are linked to global warming.

Moreover, construction workers' settlements often turn into towns after projects are completed when some workers stay on. And the presence of towns leads to more logging and ranching, which further reduce forests and cause more environmentally harmful emissions from vehicles, activists say.

“We see these projects as a disaster,” says Christian Poirier, program director for Amazon Watch, a nonprofit in Oakland, Calif., that monitors issues affecting the Amazon region. “Even small projects have had irreversible impacts.”

The Belo Monte dam on the Xingu River (Getty Images/Bloomberg/Dado Galdieri)  
The Belo Monte dam on the Xingu River, a major Amazon tributary, has been plagued by corruption and environmental problems during its construction. The $18 billion hydroelectric dam will be the world's fourth-largest when completed in 2019. (Getty Images/Bloomberg/Dado Galdieri)

The most controversial project to date has been the $18 billion Belo Monte megadam, partially completed on the Xingu River, a major Amazon tributary, and slated to be the world's fourth-largest hydroelectric dam in terms of installed capacity (11,000 megawatts) when fully operational in 2019.5 Last year, Brazil's environmental agency fined dam developer Norte Energie $10.8 million after 16.2 million tons of fish were killed when a river tributary was diverted to fill the dam's reservoir.6

The project also has become a national symbol of corruption. Last year, a Brazilian state senator testified that $12 million skimmed from overpriced Belo Monte construction contracts helped pay for former President Dilma Rousseff's 2010 and 2014 election campaigns.7 Also last year, an appeals court found a conflict of interest because Eletrobras, the state energy utility, had awarded the Belo Monte environmental assessment study without competitive bidding to three of Brazil's largest construction companies. The companies, Odebrecht Group, Andrade Gutierrez and Camargo Corrêa, later formed part of a consortium that built the dam.8

Researchers see alternatives to hydropower that are less invasive to the environment and cheaper to produce than building dams. “Brazil has a huge capacity for wind and solar. It's underinvested in these areas,” says Eve Bratman, an assistant professor of environmental studies at Franklin & Marshall College in Lancaster, Pa., who specializes in the Brazilian Amazon.

Additionally, shoring up the electricity supply grid would increase the power supply, Poirier says. “[Utilities] lose up to 20 percent of energy in transmission lines,” he says. “Just fixing old lines would make them more efficient.”

Brazil's 2024 energy plan calls for increasing both hydropower and non-hydro renewable energy sources, plus natural gas and nuclear generation. The country, which currently relies on hydroelectricity for 70 percent of its power, has seen power shortages in recent years because of drought.9

With the government reeling from a recession, many dam projects are on hold. Another factor slowing the projects is an ongoing corruption investigation called Operation Car Wash that has implicated scores of politicians and key players in the country's construction industry. But activists fear that once the dust settles, the development floodgates will reopen, especially if the government pursues infrastructure projects to reignite the economy. The Tapajós dam, for instance, can be revived with a new permit application, Poirier notes.

“There's good reason for activists to keep fighting,” Bratman says.

— Christina Hoag

[1] John Vidal, “Major Amazon dam opposed by tribes fails to get environmental licence,” The Guardian, Aug. 5, 2016, http://tinyurl.com/mojxtd4.

[2] Ibid.

[3] Wyre Davis, “Amazon culture clash over Brazil's dams,” BBC News, Jan. 10, 2017, http://tinyurl.com/m9djyfw.

[4] Ibid.

[5] Ibid.

[6] Sue Branford, “Fish kills at Amazon's Belo Monte Dam point up builder's failures,” Mongabay, July 13, 2016, http://tinyurl.com/k24pauk.

[7] “Brazil's Rousseff benefited from Belo Monte dam graft,” Reuters, March 11, 2016, http://tinyurl.com/kr3rcqs.

[8] Sarah Bardeen and Brent Millikan, “Belo Monte Operating License Suspended,” International Rivers, Sept. 6, 2016, http://tinyurl.com/mafgj7m.

[9] “Hydroelectric plants account for more than 70 percent of Brazil's power,” Electric Light & Power, Aug. 17, 2016, http://tinyurl.com/lfychsh.

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“The days when everybody is born and dies in the Catholic Church are long gone.”

Brazil has long had the world's largest population of Roman Catholics, but it may not hold that title much longer. Large numbers of Brazilians are turning to evangelical Protestant sects, mainly Pentecostalism, while many others are abandoning organized religion altogether.

“Brazil is on an inexorable march toward no longer being majority Catholic,” says R. Andrew Chesnut, a professor of religious studies at Virginia Commonwealth University in Richmond, Va. “The days when everybody is born into the Catholic Church and dies in the Catholic Church are long gone.”

According to a survey by São Paulo pollster Datafolha published last December, 50 percent of Brazilians over age 16 identified as Catholic, down from 60 percent in 2014, or about 9 million worshippers. In 1970, 92 percent of Brazilians declared themselves Catholic.10

The percentage who said in the Datafolha survey that they followed no religion doubled from 2014 to 2016, from 6 percent to 14 percent.11 The proportion of Brazilians who identified as evangelical Protestants remained at about 29 percent. Only 1 percent said they were atheists.12

Catholicism has been steadily shrinking in Brazil since the late 1960s, when military dictatorships saw Catholic liberation theology, which advocated social justice for the poor, as a threat and sought to repress church teachings, experts say. In addition, Brazil, whose slaves brought their African religions with them in earlier periods, has had a long history of embracing non-Catholic alternatives.

“Brazilians are less afraid of trying new religions. They're very open,” says Virginia Garrard-Burnett, director of the Benson Latin American Studies and Collections at the University of Texas, Austin.

Evangelicals participate in the March for Jesus (Getty Images/Victor Moriyama)  
Evangelicals participate in the March for Jesus on June 4, 2015, in São Paulo. Once solidly Roman Catholic, Brazil has seen a steady rise of evangelical Protestant sects in recent years. (Getty Images/Victor Moriyama)

While Pentecostalism has become popular in other parts of Latin America, its growth in other nations has not mirrored that in Brazil. Other Protestant sects also have made inroads in Brazil and Latin America, including Mormonism, which has doubled its number of Brazilian congregations since the 1980s and now has 1.3 million adherents.13

Brazil's urban poor, with little access to medical care, were the first to turn to Pentecostalism, finding appeal in the movement's emphasis on faith healing. Many Brazilian poor also embraced Pentecostalism's other rituals, including speaking in tongues and exorcism, that had parallels with African-based religions such as candomblé, scholars say.

Moreover, the urban poor felt more affinity with their pastors, many of whom were darker skinned and less educated than Catholic priests, traditionally regarded as part of the elite, who are mostly lighter skinned, Chesnut says.

Pentecostalism has since grown to encompass the middle and upper classes and expanded to rural and suburban areas. Faith leaders have succeeded by conducting marketing surveys to determine people's needs and building programs to address them, establishing media networks to reach more converts and building so-called megachurches.

One such center is the Universal Church of the Kingdom of God's Temple of Solomon in São Paulo, designed to resemble the ancient temple in Jerusalem. It can accommodate 10,000 congregants, says Garrard-Burnett.

“[Evangelical churches] are really a presence in every level of society in a way that few Brazilian institutions are,” says Garrard-Burnett, a history and religious studies professor who specializes in Latin American Protestantism.

The Catholic Church has responded to the membership loss by establishing charismatic churches, which, like Pentecostalism, offer faith healing, prophecy, speaking in tongues and popular music during Mass. It also has endorsed personalities such as Marcelo Rossi, a charismatic-church pop-star priest with a Snapchat account who gives concerts and records albums, experts say. Formally known as the Catholic Charismatic Renewal, the movement originated in the 1960s and has become an accepted part of the Catholic Church with Vatican support.

“There was lightning-speed approval of charismatic churches in all the episcopacies,” Chesnut says. “They saw it as the best way to compete.”

The choice of Pope Francis, an Argentinian, in 2013 to lead the Catholic Church was widely seen as an effort by the Vatican to stem the exodus of Catholics throughout Latin American. But while Francis is extremely popular in Brazil, experts say the hemorrhaging continues. “He's more likely to stanch the flow of secular conversions rather than conversions to the Pentecostals,” Garrard-Burnett says.

In societies with widespread poverty, weak social support from government and little opportunity, evangelical Protestant churches can be hard to beat, scholars say. Besides preaching the prosperity gospel, which holds that faith will be rewarded by material wealth, such churches typically offer life resources, such as literacy skills and instruction about how to open a bank account.

“They've sort of understood the culture they're working in, Brazilians' history, their worldview, and they've been incredibly successful,” Garrard-Burnett says. “The Catholic Church took Brazil for granted for the longest time.”

— Christina Hoag

[10] “Brazil: Loss of at least 9 million Catholics in two years,” Documentation Information Catholiques Internationales, Feb. 2, 2017, http://tinyurl.com/mc7dos5; “The Catholic Church in Brazil and the evangelical offensive,” Documentation Information Catholiques Internationales, Sept. 8, 2013, http://tinyurl.com/myhltrq.

[11] Ana Estela de Sousa Pinto, “At Least Nine Million Brazilians Give Up Catholicism, Shows Datafolha Survey,” Folha de S. Paulo, Dec. 26, 2016, http://tinyurl.com/jvqmldb.

[12] “Brazil: Loss of at least 9 million Catholics in two years,” op. cit.

[13] “Brazil,” Church of Jesus Christ of the Latter-day Saints, http://tinyurl.com/ktv3mkz.

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Bibliography

Books

Alston, Lee J., et al., Brazil in Transition: Beliefs, Leadership and Institutional Change , Princeton University Press, 2016. Academics and other experts analyze Brazil's political and economic history over the last 50 years, examining how the nation evolved into a potential world superpower and what remains to be done to achieve that status.

Barbassa, Juliana , Dancing with the Devil in the City of God: Rio de Janeiro and the Olympic Dream , Touchstone, 2015. A former Associated Press correspondent examines the city of her birth, detailing both its glamour and drawbacks.

Cuadros, Alex , Brazillionaires: Wealth, Power, Decadence, and Hope in an American Country , Spiegel & Grau, 2016. A journalist chronicles how Brazil's superrich amassed spectacular wealth through political skullduggery, their soap opera lives and their downfalls amid economic collapse.

Mares, David R. and Harold A. Trinkunas , Aspirational Power: Brazil on the Long Road to Global Influence , Brookings Institution Press, 2016. Scholars at a Washington think tank explain why Brazil, despite its size, has never emerged as a global power.

Reid, Michael , Brazil: The Troubled Rise of a Global Power , Yale University Press, 2016. The Latin American columnist for The Economist explores why Brazil has been overshadowed by other emerging economies such as Russia, China and India, and what the South American nation must do to gain equal status to those nations.

Schneider, Ben Ross , New Order and Progress: Development and Democracy in Brazil , Oxford University Press, 2016. A professor in the Massachusetts Institute of Technology's Brazil program explains why Brazil has not achieved its potential despite gains in its economic and political stability since the days of military dictatorship.

Articles

DiLorenzo, Sarah, and Mauricio Savarese , “Fed up with politics, Brazil cities swear in outsider mayors,” The Associated Press, Jan. 1, 2017, http://tinyurl.com/l7xx2nq. Sao Paulo and Rio de Janeiro inaugurated political outsiders as mayors, underscoring the public's frustration with politicians and rampant corruption.

Phillips, Dom , “Once underfed, Brazil's poor have a new problem: obesity,” The Washington Post, Nov. 21, 2016, http://tinyurl.com/mvxkkqo. Brazilians' emergence from poverty has led to new diets of junk and processed food, which in turn has caused a sharp rise in obesity.

Rapoza, Kenneth , “Brazil's Sale of the Century,” The Boston Globe, June 5, 2016, http://tinyurl.com/ln2uan2. Brazil's state oil company, Petrobras, can recoup from corruption scandal setbacks by allowing foreign companies full control over deep-water oil wells.

Stevenson, Alexandra, and Vindo Sreemarsha , “Secret Unit Helped Brazilian Company Bribe Government Officials,” The New York Times, Dec. 21, 2016, http://tinyurl.com/lbtpedu. Latin America's biggest construction company had a division that coordinated and facilitated bribes and kickbacks.

Watts, Jonathan , “Fresh crisis in Brazil as new president faces corruption allegations,” The Guardian, Nov. 25, 2016, http://tinyurl.com/mgjr45z. A former Cabinet colleague of President Michel Temer alleges he used his influence in a construction project, fueling opposition moves for impeachment.

Reports and Studies

Brasil, P., et al., “Zika Virus Infection in Pregnant Women in Rio de Janeiro,” The New England Journal of Medicine, Dec. 15, 2016, http://tinyurl.com/gp5fda9. Medical experts study the effects of the Zika virus on pregnant women and their newborns.

Moro, Sergio , “Handling Systemic Corruption in Brazil,” Wilson Center for International Scholars, Dec. 8, 2016, http://tinyurl.com/ktfn3e7. A Brazilian judge known for his efforts to reform the judicial system discusses the extent of graft and the partly successful efforts to combat it.

Muggah, Robert , “The State of Security and Justice in Brazil: Reviewing the Evidence,” Brazil Initiative, George Washington University, March 2015, http://tinyurl.com/kmedcl9. A specialist in security and development examines the challenges and reforms in Brazil's public safety and justice systems.

Nobre, Carlos A., et al., “Land-use and climate change risks in the Amazon and the need of a novel sustainable development paradigm,” National Academy of Sciences, Aug. 11, 2016, http://tinyurl.com/n3p3svu. Scientists examine deforestation in the Brazilian Amazon over the past 50 years and say a new sustainable development approach is needed.

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The Next Step

Corruption

Carolina, Maria Marcello, and Brad Brooks , “Brazil's gov't says meat industry may lose 10 pct market share,” Reuters, Nasdaq, March 22, 2017, http://tinyurl.com/lo6tfxg. Allegations of corruption and unsafe meat could hurt Brazil's meatpacking industry.

Trevisani, Paulo , “Brazil Cases Against Politicians Include Corruption, Money Laundering,” The Wall Street Journal, March 16, 2017, http://tinyurl.com/kk7mlun. Brazil's prosecutor general requested permission from the country's Supreme Court to investigate senior officials in President Michel Temer's Cabinet as part of a corruption and money laundering probe known as Operation Car Wash.

Woody, Christopher , “Brazil's latest corruption scandal appears to be rotting one of its major exports,” Business Insider, March 21, 2017, http://tinyurl.com/kscx8xb. After a two-year investigation, federal police launched almost 200 raids targeting Brazilian food processors, which are accused of bribing government officials to allow the sale of poor-quality meat.

Environmental Challenges

Fadnes, Ingrid , “Brazil's Fundao dam collapse: The silence after the mud,” Al Jazeera, June 14, 2016, http://tinyurl.com/hzteypr. The three companies that operated the Fundao dam in the Brazilian state of Minas Gerais have agreed to spend $5.6 billion to repair damage caused when the dam burst, unleashing a massive mudslide.

Tabuchi, Hiroko, Claire Rigby and Jeremy White , “Amazon Deforestation, Once Tamed, Comes Roaring Back,” The New York Times, Feb. 24, 2017, http://tinyurl.com/zqs8atw. A resurgence of deforestation in the Brazilian Amazon is driven by farmers clearing their land to meet demand for soybeans.

Totaro, Paola , “Environmentalists and farmers must unite to save Amazon, says ex Brazilian minister,” Reuters, March 23, 2017, http://tinyurl.com/koqnzww. Brazil's former environmental minister urged environmentalists and the agriculture industry to work together to protect the country's largest tropical rainforest.

Labor Reforms

“Brazil moves to allow outsourcing in labor law modernization,” Reuters, March 22, 2017, http://tinyurl.com/my522tz. Over the fierce objections of labor unions, the Brazilian Congress passed a bill to allow companies to outsource jobs and offer longer temporary work contracts.

Lazzeri, Thais , “Investigations Reveal Slave Labor Conditions in Brazil's Timber Industry,” Pacific Standard, March 15, 2017, http://tinyurl.com/l4e6g8a. The Brazilian government played a role in creating the slave labor-like conditions in the logging industry, according to a report by a land commission and a human-rights group.

Taylor, Ed , “Brazil: McDonald's Fined $30 Million for Labor Law Violations,” Bloomberg BNA, Dec. 7, 2016, http://tinyurl.com/l45vpeb. The Brazilian labor ministry fined the country's McDonald's unit $30 million after an investigation found the company was violating labor laws.

Recession

“Brazil's Temer Says Economy Turning Around, Confidence Rising,” Reuters, Voice of America, March 17, 2017, http://tinyurl.com/k8jda9x. Moody's raised its outlook on Brazil's economy from negative to stable amid signs the nation is slowly emerging from the worst recession in its history.

Adghirni, Samy , “Brazil Economy Adds Jobs for First Time in Two Years,” Bloomberg, March 16, 2017, http://tinyurl.com/mrkp8ct. Brazil added more than 35,000 jobs in February after 22 months of job losses, President Michel Temer announced.

Gillespie, Patrick , “Brazil's worst recession: 8 consecutive quarters of contraction,” CNN, March 7, 2017, http://tinyurl.com/kebvevm. Brazil's economy shrank 3.6 percent in 2016, a slight improvement from 2015, when it contracted 3.8 percent.

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Contacts

Brazilian-American Chamber of Commerce
509 Madison Ave., New York, NY 10022
212-751-4691
www.brazilcham.com
Promotes trade and investment and closer business ties between Brazil and the United States.

The Brazil Initiative
George Washington University, 1957 E St., N.W., Suite 501, Washington, DC 20052
202-994-4060
www.brazil.elliott.gwu.edu
Promotes understanding of Brazilian culture, development, history and foreign policy.

Brazil-U.S. Business Council
1615 H St., N.W., Washington, DC 20062
202-463-5729
www.brazilcouncil.org
Promotes policies for increasing cooperation, bilateral trade and investment between the United States and Brazil.

Council of the Americas
Suite 250, 1615 L St., N.W., Washington, DC 20036
202-659-8989
www.as-coa.org
Business think tank focusing on free trade, open markets and democracy in the Americas.

Embassy of Brazil
3006 Massachusetts Ave., N.W., Washington, DC 20008
202-238-2700
www.washington.itamaraty.gov.br/en-us
Official diplomatic mission of Brazil in the United States.

Inter-American Dialogue
1155 15th St., N.W., Suite 800, Washington, DC 20005
202-822-9002
www.thedialogue.org
Think tank that works to foster better understanding and mutual cooperation in the Americas.

Lemann Center for Brazilian Studies
Columbia University, 420 W. 118th St., 8th Floor IAB, MC 3339, New York, NY 10027
212-854-4642
www.ilas.columbia.edu/centers-and-programs/brazil-center
Sponsors lectures and visiting scholars on contemporary and historical aspects of Brazil and funds research grants.

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Footnotes

[1] Blake Schmidt and Sabrina Valle, “Brazil's Marcelo Odebrecht Gets 19 Years in Jail in Carwash,” Bloomberg, March 8, 2016, http://tinyurl.com/mo8t4xo.

[2] Andrew Jacobs and Paula Moura, “At the Birthplace of a Graft Scandal, Brazil's Crisis Is on Full Display,” The New York Times, June 10, 2016, http://tinyurl.com/llj4q8c.

[3] Brian Winter, “Brazil's Car Wash Probe: Tell Me How This Ends,” Americas Quarterly, Sept. 28, 2016, http://tinyurl.com/k57fjrz.

[4] Merrit Kennedy, “Brazil's Recession The Longest And Deepest In Its History, New Figures Show,” NPR, March 7, 2017, http://tinyurl.com/knbgwjm; “Brazil Unemployment Hit Fresh High of 12.6%,” Trading Economics, undated, http://tinyurl.com/7rzyjnf.

[5] “Brazil: People & Society” and “Brazil: Economy,” CIA World Factbook, http://tinyurl.com/kzfjzg5; “Brazil National Economic Profile,” United Nations Economic Commission of Latin America and the Caribbean, http://tinyurl.com/kpsko9h; “Mexico National Economic Profile.” United Nations Economic Commission of Latin America and the Caribbean, http://tinyurl.com/n5gnm7f; and “Nicaragua National Economic Profile,” United Nations Economic Commission of Latin America and the Caribbean, http://tinyurl.com/lu2p76k.

[6] Ibid., “Brazil: Economy.”

[7] “Brazil's Lula to leave office with record-high popularity,” Reuters, Dec. 16, 2010, http://tinyurl.com/lo5qq9w.

[8] “Brazil and the United Nations Security Council,” Ministry of Foreign Affairs, undated, http://tinyurl.com/m7dkdaq.

[9] “Country Comparison, Distribution of Family Income: GINI Index,” CIA World Factbook, http://tinyurl.com/mn8how.

[10] Jessica Brice, Ney Hayashi and David Biller, “Brazil Suffers Slow Growth with Lula China Policy Sowing Doubts,” Bloomberg, Sept. 22, 2014, http://tinyurl.com/laex39m.

[11] “Corruption Perceptions Index 2016,” Transparency International, http://tinyurl.com/z7bmnu8.

[12] “Brazil starts jailing those convicted in ‘Mensalao’ trial,” Agence France-Presse, The Telegraph, Nov. 16, 2013, http://tinyurl.com/ksahhpq.

[13] Fabiola Moura and Jessica Brice, “Brazil Has a School Problem,” Bloomberg News, March 2, 2017, http://tinyurl.com/me96mas; Simon Romero, “Dilma Rousseff Is Ousted as Brazil's President in Impeachment Vote,” The New York Times, Aug. 31, 2016, http://tinyurl.com/ko4joz2.

[14] Samy Adghirni, “After Oil Industry Shift, Brazil Seeks to Open Up Defense,” Bloomberg, Oct. 25, 2016, http://tinyurl.com/kgmq6wl.

[15] Vinicy Chan, “The Gold Medal for Buying Up Brazilian Assets Goes to China, Inc.,” Bloomberg, Aug. 18, 2016, http://tinyurl.com/n733fsx.

[16] “Brazil to ease local content rules in oil industry,” Reuters, Oct. 17, 2016, http://tinyurl.com/m92754u.

[17] “Country Comparison Crude Oil Production,” CIA World Factbook, http://tinyurl.com/kssswhm.

[18] Rebeca Duran, “Importation of Oil in Brazil,” The Brazil Business, Aug. 26, 2013, http://tinyurl.com/meg8o9z.

[19] Simon Romero, “As a Distracted Brazil Mourns, Lawmakers Gut a Corruption Bill,” The New York Times, Nov. 30, 2017, http://tinyurl.com/m23pdsz.

[20] Brad Brooks, “Brazil prosecutors hit ex-president Lula with more corruption charges,” Reuters, Dec. 15, 2016, http://tinyurl.com/l7x8hyp.

[21] “Lula indictment may affect 2018 race,” The Economist, Sept. 22, 2016, http://tinyurl.com/kovbclo.

[22] Mario Sergio Lima, Anna Edgerton and Bruce Douglas, “Lula Faces Trial as Judge Accepts Corruption Charges,” Bloomberg, Sept. 20, 2016, http://tinyurl.com/zpwuojn.

[23] Ryan Lloyd and Carlos Oliveira, “How Brazil's electoral system led the country into political crisis,” The Washington Post, May 25, 2016, http://tinyurl.com/kw7shgn.

[24] Igor Utsumi, “Funding of Political Parties in Brazil,” The Brazil Business, Oct. 3, 2014, http://tinyurl.com/k4s7eeo; Anthony Boadle, “Millionaires, evangelicals benefit from Brazil campaign funds ban,” Reuters, Sept. 29, 2016, http://tinyurl.com/lxelz32.

[25] Alex Cuadros, Brazillionaires: Wealth, Power, Decadence, and Hope in an American Country (2016), p. 12.

[26] Erik Ortiz, “What is a favela? 5 Things to Know About Rio's So-Called Shantytowns,” NBC News, Aug. 4, 2016, http://tinyurl.com/hp3sssz.

[27] Jing Xu, “Economic Inequality in Brazil,” The Borgen Project, July 28, 2014, http://tinyurl.com/krgj9h3; “Country Comparison: Distribution of Family Income, Gini Index,” CIA World Factbook, Central Intelligence Agency, http://tinyurl.com/lf7gjwy.

[28] Deborah Wetzel, “Bolsa Família: Brazil's Quiet Revolution,” World Bank, Nov. 4, 2013, http://tinyurl.com/mopjhv5; Sarah Illingworth, “Bolsa Família: The Program Helping 50M Brazilians Exit Poverty,” The Huffington Post, June 10, 2015 (updated June 9, 2016), http://tinyurl.com/kvbfbov; and Jay Forte, “Brazil Raises 2017 Monthly Minimum Wage to R$937,” Rio Times Online, Dec. 30, 2016, http://tinyurl.com/l7t7puo.

[29] “Brazil,” Organisation for Economic Co-Operation and Development, http://tinyurl.com/lc2q2de.

[30] Fabiola Moura and Jessica Brice, “Brazil Has a School Problem,” Bloomberg, March 2, 2017, http://tinyurl.com/k6wod3d.

[31] Lise Alves, “Brazilian Government Announces New Education Model,” Rio Times, Sept 23, 2016, http://tinyurl.com/kbaw8ka.

[32] Pam Bellick and Tania Franco, “For Brazil's Zika Families, a Life of Struggles and Scares,” The New York Times, March 11, 2017, http://tinyurl.com/k32waok. Also see Alan Greenblatt, “Mosquito-Borne Disease,” CQ Researcher, July 22, 2016, pp. 601–624.

[33] “National Security Plan will rationalise prison system,” Brazil Office of the Presidency, Jan. 4, 2017, http://tinyurl.com/k5zm8br.

[34] “Brazil's former richest man Eike Batista sent to prison,” BBC, Jan. 31, 2017, http://tinyurl.com/kb53vho; Anderson Antunes, “Former Billionaire Eike Batista Bemoans His Return to the Middle Class,” Forbes, Sept. 18, 2014, http://tinyurl.com/nxa34pe.

[35] “Brazil: Transportation,” U.S. International Trade Administration, Export.gov, Oct. 14, 2016, http://tinyurl.com/km85no9.

[36] Athena Peppes and Armen Ovanessoff, “What Business Must Do To Reignite Brazil Productivity Growth,” Accenture, 2015, p. 17, http://tinyurl.com/mu2z5p9; Ibid., “Brazil: Transportation.”

[37] Moura and Brice, op. cit.

[38] Forte, op. cit.; Peppes and Ovanessoff, op. cit., p. 18.

[39] Cynthia Fujikawa Nes, “Brazilian Employment Law in a Nutshell,” The Brazil Business, Nov. 20, 2016, http://tinyurl.com/llmftkf.

[40] Peppes and Ovanessoff, op. cit., p. 15.

[41] Luiza Belloni, “Despite Brazil's Financial Crisis, Havaianas Still Has the World at Its Feet,” The Huffington Post, Dec. 4, 2015, http://tinyurl.com/me2mqj6.

[42] Lourdes Casanova, “Making the Brazil Dream a Reality,” Latin Trade, undated, http://tinyurl.com/m3a85vx.

[43] Bruce Douglas and Matthew Malinowski, “Brazil Worries the ‘China of South America’ Is Eating Its Lunch,” Bloomberg, Jan. 9, 2017, http://tinyurl.com/lbb64yp.

[44] Thomas E. Skidmore, Brazil: Five Centuries of Change (1999), p. 5.

[45] Marshall C. Eakin, Brazil: The Once and Future Country (1997), p. 15.

[46] Boris Fausto, A Concise History of Brazil (1999), pp. 9–11.

[47] Skidmore, op. cit., pp. 17, 19.

[48] Fausto, op. cit., p. 49.

[49] Skidmore op. cit., p. 30.

[50] Eakin, op. cit., p. 27; ibid., Skidmore, p. 36.

[51] Fausto, op. cit., p. 70; ibid., Eakin, pp. 28–29.

[52] José Fonseca, “A Brief History of Brazil,” The New York Times, undated, http://tinyurl.com/kx35luw.

[53] Skidmore, op. cit., pp. 54, 70.

[54] Eakin, op. cit., p. 37.

[55] Ibid., Eakin, p. 34.

[56] Ibid., pp. 43–46.

[57] Skidmore, op. cit., pp. 136–138.

[58] Ibid., p. 139.

[59] Eakin, op. cit., p. 55.

[60] Skidmore, op. cit., pp. 165–166.

[61] Ibid., pp. 177, 181.

[62] Eakin, op. cit., p. 59; Fausto, op. cit., p. 305.

[63] Fonseca, op. cit.

[64] Fausto, op. cit., p. 315; Skidmore, op. cit., p. 217.

[65] Ibid., Fausto, p. 319.

[66] Mark S. Langevin and Timothy Stackhouse, “Brazil and Development: Growth, Equity and Sustainability in the 21st Century,” Brazil Initiative, George Washington University Elliott School of International Affairs, August 2015, p. 4, http://tinyurl.com/mxo4ppb; Skidmore, op. cit., p. 228.

[67] Ibid., Skidmore; “Historic inflation: Brazil,” Inflation.eu, undated, http://tinyurl.com/mpg4dkb.

[68] Walter Brandimarte and Vivianne Rodrigues, “From Guerrilla to Impeachment: The Dilma Rousseff Story,” Bloomberg, Aug. 30, 2016, http://tinyurl.com/jauahf6.

[69] Ibid.

[70] Brad Haynes and Sergio Spagnuolo, “Brazil police raid BRF and JBS plants in meatpacking probe,” Reuters, March 17, 2017, http://tinyurl.com/labmr7d.

[71] Alonso Soto and Reese Ewing, “Brazil's federal, state governments reach accord to balance accounts,” Reuters, Nov. 22, 2016, http://tinyurl.com/kgjcrd4.

[72] Mac Margolis, “In Brazil, State Debt Is a Ticking Time Bomb,” Bloomberg, Dec. 2, 2016, http://tinyurl.com/mr697fp.

[73] Jonathan Watts, “Rio de Janeiro governor declares financial emergency ahead of Olympics,” The Guardian, June 17, 2016, http://tinyurl.com/lzdrfxh; “The cost of hosting this year's Olympics in Rio lowest since 2004,” Sports Illustrated, Aug. 24, 2016, http://tinyurl.com/jk6c6a2; and Anna Jean Kaiser, “Legacy of Rio Olympics Is So Far Series of Unkept Promises,” The New York Times, Feb. 15, 2017, http://tinyurl.com/lt678fp.

[74] Marina Lopes, “Police went on strike in a Brazilian state. The result was near anarchy,” The Washington Post, March 1, 2017, http://tinyurl.com/knr7ee6.

[75] “Brazil army takes over state's security as 100 killed amid police strike,” The Guardian, Feb. 9, 2017, http://tinyurl.com/za7swg8.

[76] Soto and Ewing, op. cit.

[77] Rachel Garnarski and Walter Brandimarte, “Brazil's Indebted States Dealt Blow as Temer Vetoes Relief,” Bloomberg, Dec. 28, 2016, http://tinyurl.com/kjqecpr.

[78] Rachel Garnarski and Samy Adghirni, “Brazil's Government Deal With Rio Won't Solve Its Debt Crisis,” Bloomberg. Jan. 31, 2017, http://tinyurl.com/m8ppwvx.

[79] Mary Sadler, “Is Brazil's Recovery Back on Track for 2017?” Market Realist, Feb. 24, 2017, http://tinyurl.com/n9xgss7.

[80] Joe Leahy, “Business bets big on Brazil economic rally,” Financial Times, Feb. 6, 2017, http://tinyurl.com/ltrpfm4.

[81] Fabiola Moura, “Nestle to Open $86 million Brazil Plant to Tap Dog Food Demand,” Bloomberg, Feb. 2, 2017, http://tinyurl.com/lrjggpj.

[82] Joe Leahy, “Temer stays tough on Brazil economic reforms,” Financial Times, Feb.2, 2017, http://tinyurl.com/mb5qqab.

[83] Anthony Boadle and Marcela Ayres, “Brazil Senate passes spending cap in win for Temer,” Reuters, Dec. 13, 2016, http://tinyurl.com/mm5arwp.

[84] Leahy, op. cit.

[85] Marina Lopes and Nick Miroff, “How a scandal that started in Brazil is now roiling other Latin American countries,” The Washington Post, Feb. 22, 2017, http://tinyurl.com/l3yadjc.

[86] Zainab Calcuttawala, “Brazilian Congress Authorizes Sale of Petrobras ‘Pre-Salt’ Fields,” Oilprice.com, Nov. 29, 2016, http://tinyurl.com/jwacxt9.

[87] Andrea Zarate, “Corruption Scandal Ensnares Leaders of Peru and Colombia,” The New York Times, Feb. 7, 2017, http://tinyurl.com/k7nzcm9.

[88] “Colombia's Santos calls for probe of Odebrecht's role in 2014 campaign,” Reuters, Feb. 8, 2017, http://tinyurl.com/ldzko87.

[89] Alexandra Stevenson and Vinod Sreeharsha, “Secret Unit Helped Brazilian Company Bribe Government Officials,” The New York Times, Dec. 21, 2016, http://tinyurl.com/mmtu77q; Marina Lopes and Nick Miroff, “How a scandal that started in Brazil is now roiling other Latin American countries,” The Washington Post, Feb. 22, 2017, http://tinyurl.com/l3yadjc.

[90] Peter Prengaman, “Brazil Prosecutor Says Massive Corruption Prosecution Could Double in Size,” Time, Jan. 26, 2017, http://tinyurl.com/mhoty99.

[91] Ibid.

[92] Sarah DiLorenzo and Mauricio Saverese, “Fed up with politics, Brazil cities swear in outsider mayors,” The Associated Press, Jan. 1, 2017, http://tinyurl.com/l7xx2nq.

[93] Flavio Ferreira, “Marina Silva is the leader in all second round scenarios, points Datafolha,” Folha de S. Paulo, Dec 12, 2016, http://tinyurl.com/kq3wqy3.

[94] Ibid.

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About the Author

Christina Hoag, author of this week's edition of CQ Researcher  

Christina Hoag is a freelance journalist in Los Angeles. She previously worked for The Miami Herald and The Associated Press and was a correspondent in Latin America. She is the co-author of Peace in the Hood: Working with Gang Members to End the Violence.

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Document APA Citation
Hoag, C. (2017, April 7). Troubled Brazil. CQ researcher, 27, 289-312. Retrieved from http://library.cqpress.com/
Document ID: cqresrre2017040700
Document URL: http://library.cqpress.com/cqresearcher/cqresrre2017040700
ISSUE TRACKER for Related Reports
Brazil
Apr. 07, 2017  Troubled Brazil
Jun. 07, 2011  Brazil on the Rise
Apr. 12, 1972  Brazil: Awakening Giant
Sep. 27, 1969  Amazon Basin Development
Jan. 26, 1966  Brazil: Democracy or Dictatorship
Jan. 15, 1962  Brazil in Ferment
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