BRAZIL-The end of a "colony"

From discovery to the present

Often in my discussions with Brazilians of both right and left political persuasion, I used to argue that Brazil was still a colony.

When Brazil was discovered in 1500 it was claimed as a colony of Portugal. For 308 years it was the object of mother country exploitation of its natural resources. 

In 1808, the Portuguese Court, fleeing Napoleon, hightailed it out of Lisbon and landed in Brazil to make the colony the seat of government of its own mother country.

In 1823, Brazil declared its independence – not from Portugal per se but from the Portuguese legislature that demanded the monarch (Pedro I) return to Portugal and be subject to a constitutional monarchy. He refused and remained in Brazil as emperor. The same family continued to rule Brazil from 1500 to 1889 when a Republic was born from a military “coup”.

The proclamation of a Republic did not free Brazil from its colonial status. Rather, it made the country a colony of its own oligarchs and kleptocrats. Those who ran Brazil at the time of the Republic were rural oligarchs who produced cocoa, coffee, sugar, and beef and former slave traders and slave owners who were opposed to the development of industry and the loss of their privileged perches. 

The early years of the 20^th century were marked by spurts of industrial growth under the control of populist leaders who made sure things never really got out of control and their cronies would be able to confiscate the rents of society.

Brazil was essentially a colony of itself.

As late as 1965, Brazil was still an exporter of agricultural commodities and iron ore, all protected by subsidies, quotas, international price negotiations to form cartels, etc.

It had only a small nucleus of private sector companies. The state was the main driver of development, replacing the monarch.

In the 25 years of military rule Brazil was taken on a “forced march” to create a modern industrial base. Economically it can be considered relatively successful. However, when the military turned the country back over to civilian rule, the traditional class of kleptocrats returned with a vengeance. 

The party ended in hyperinflation and the impeachment of the first popularly elected president in 30 years. It was not until the mid-90s that Brazil’s chronic inflation (that had served the kleptocracy well over decades) was brought to an end with the Real Plan. 

Under the Real Plan, the country increased the ranks of the “middle class” by 40 million individuals – 20% of the entire population! After two terms in office, the administration of Fernando Henrique Cardoso turned over the government to a highly popular and populist figure – Luiz Inácio “Lula” da Silva. So popular was the Real Plan and so powerful the euphoria of the arrivistes that Lula promised to adhere to the fundamentals of the Real Plan.

That, however, was not to be. After promising in a letter to the Brazilian people that he would stay with and continue the reforms of the Real Plan and thereby winning the election, he reversed direction and began a plan to remain in power in perpetuity. The crony politics of the first few decades of the 20^thcentury returned, corruption increased, and one financial scandal after another ensued.

This was not what Brazilians expected after 25 years of military rule and a decade of policy chaos. 

The judiciary, traditionally more independent than the legislature, began investigating and sanctioning corruption and (to the chagrin of the kleptocrats) started putting people who had never gone to jail in the past into prison cells.

The “colonists” were pleased and exhorted the government to get things back on track. Their exhortations were ignored and the government continued as before occasionally announcing that it was "democracy" to express dissatisfaction. 

The Real Plan had, however, created a powerful forward inertia, which by 2010 had pretty much played itself out and with no follow-on reforms, the economy suddenly slowed down. 

Lula, however, had managed to remain popular and in 2010 elected his successor, Dilma Rousseff, to follow through on his promises that remained un-kept. Dilma, however, seemed to have some plans of her own – one of which was to create a new economic framework for Brazil that would support the plan for Lula to return to office to reign in perpetuity.

Millions of Brazilians subsequently voiced their opposition to this plan and the attendant corruption that was to facilitate it. Many of those who had ascended to middle class status following the Real Plan have now reverted to their former lower class status. Some have lost their jobs, removed their kids from better schools, and are now working down debt taken down when they had moved up on the income ladder.

It now appears that Brazilians are no longer willing to accept “colonial status” and are demanding an end to the kleptocracy characteristic of colonies. They want an open, well-governed society with strong institutions and at least relatively honest statesmanship to create sustainable growth and prosperity for all. They demand to be the owners of their own choices.

The only thing certain at this point in time is that no matter how the current political and economic crises play out, Brazil will have shaken off its colonial status and will be unlikely to revert to the status quo ante. People who once tolerated and lived with inflation at over 2,000% per year are now seriously bothered by inflation at 7%! They want what the rest of the world has. They know how to get it. And they are determined to do so.

Whatever happens from this point forward is still up for grabs, but Brazil’s status as a colony of its own elites has definitely ended!