Return of Democracy

Brazilians anxiously waited for the first civilian president in two decades to be sworn in as president. Tragically, the night before his inauguration ceremony, Tancredo Neves was rushed to the hospital with a bleeding stomach tumor. Although the tumor wasn’t fatal, the hospital was. Neves caught septicemia, a bacterial infection that led to his death. After millions mourned him, they watched the televised swearing in of his vice president, José Sarney, an old-school and uninspiring former state governor from Maranhão [1].

As Brazil [2]’s first new democratic president, Sarney quickly dashed Brazilians’ hopes of a better future. Due to the ballooning foreign debt, inflation was so high that currencies were adopted and discarded with regularity. Meanwhile, an uncensored press was free to report the endless string of financial scandals that sullied the government’s reputation and filled struggling Brazilians with disgust.

Things only got worse with the election of Sarney’s successor: a pretty-boy millionaire and karate champ named Fernando Collor de Melo. A dashing figure who wouldn’t have been out of place on a nightly novela (soap opera), Collor had been governor of the small northeastern state of Alagoas and was a member of one of its oldest and richest families. After narrowly defeating Lula da Silva of the PT in 1990, he presided over a government whose disasters reached epic proportions.

Collor’s solution to controlling hyper inflation was to freeze Brazilians’ bank accounts, a measure that quickly incited the wrath of the middle classes (poor Brazilians don’t have bank accounts and, at the time, rich Brazilians had their money stashed overseas). Feelings of outrage spread throughout the populace when it came to light (via Collor’s own brother, Pedro) that Collor and his cronies had been siphoning billions of dollars in public money into private accounts. The scandal was so great that Congress began impeachment proceedings, spurred on by hundreds of thousands of Brazilians who took to the streets demanding justice.

Forced to step down in September of 1992, Collor was banned from political office for eight years. Much of this time, he spent in Miami, working on his tan and plotting his comeback, which—in keeping with Brazilian political norms—took place when he was reelected in 2006 for an eight-year term as a senator for his home state of Alagoas.

Collor was replaced by his vice president, Itamar Franco, a weak figure who nonetheless had the inspired decision to select as his finance minister a clever politician and savvy economist named Fernando Henrique Cardoso. Known popularly as “FHC,” Cardoso was a widely respected São Paulo sociologist with leftist leanings who went into exile during the military dictatorship.

By the time he joined Franco’s government, his politics had migrated to the center-right, as had his economics, which were influenced by years spent teaching and studying in the United States. FHC took on Brazil’s floundering economy by implementing the “Plano Real” in 1994. By creating a new currency, the real, and tying its value to the U.S. dollar, Cardoso finally brought runaway inflation to a grinding halt for the first time in decades. When elections were held the following year, he easily defeated his rival, Lula.

With FHC as president for the next eight years (1994–2002), the New Republic finally had its first serious and competent leader. Inflation remained low and the economy began to grow in leaps and bounds, spurred on by rampant privatization of corrupt and inefficient public companies, the opening up of the Brazil [2]’s frontiers to foreign capital and interests, and the relaxation of importation barriers. Although initially, inefficiently run companies that had survived due to lack of foreign competition sank, many others were forced to get competitive in a hurry, and they did so, reaching international levels of quality, efficiency, and innovation.

Massive economic reforms were accompanied by the beginnings of much-needed political and social reforms with particular focus upon the critical areas of health and education. However, the eternally gaping distance between Brazil’s haves and have-nots was hardly bridged at all. Moreover, during FHC’s second presidential term a series of large-scale corruption scandals once again revealed the fundamentally rotten state of Brazil’s political and justice systems.