The largest country in South America, Brazil became independent of Portugal in 1822. Today, it is renowned as the site of the world's largest tropical rainforest, the threat to which led to the UN's first international environment conference, held in Rio de Janeiro in 1992. Covering one-third of Brazil's total land area, the rainforest grows around the massive Amazon River and its delta. Apart from the basin of the River Plate in the south, the rest of the country consists of highlands. The mountainous northeast is part forested and part desert. Brazil is the world's leading coffee producer and also has rich reserves of gold, diamonds, oil, and iron ore. Cattle-ranching is an expanding industry. The city of São Paulo is the world's fourth-biggest conurbation, with some 20 million inhabitants.

Brazil's population is highly diverse. It includes indigenous Amerindian groups, as well as the descendants of its Portuguese colonizers and the Africans brought to work the sugar plantations in the 17th century. More recent immigrant groups include both Italians and Japanese. Extremes of social disadvantage challenge the notion that Brazil is a "racial democracy." Poor, mixed-race migrants are treated as outcasts in cities. Afro-Brazilians suffer higher infant mortality and poverty and more racial and job discrimination than other groups – a program of "positive discrimination" was launched in 2002. Amerindians also experience widespread prejudice, and of the estimated 1000 groups present at the time of the arrival of the first Portuguese, about 210 remain – a total population of about 220,000, who struggle to secure land rights.

Brazil is strongly Catholic, but other religions also flourish. The traditional emphasis on the family is under pressure in urban areas: migrants in particular often have to leave their families behind.

Women gained the vote in 1934, but are still discriminated against in jobs and politics.

Strengths

Dominant economy in region. Strong foreign direct investment flows. Huge growth potential: immense natural resources; major producer of coffee, soy, sugar, oranges; large deposits of gold, silver, and iron; major steel producer; developing oil industry. Development aided by cross-border infrastructural projects and modernization of telecoms.

Weaknesses

Expensive domestic borrowing. Weak local capital markets. Vulnerability to external shocks and commodity price fluctuations. Modest productivity. Heavy debt burden. Great social inequalities threaten social unrest. Overdependence on hydropower and on old and badly maintained transmission network leads to electricity blackouts.

Profile

Brazil is the world's ninth-largest economy. Average growth from the start of the 20th century to the early 1970s was over 5%, second only to Japan over a comparable period. Diversification and industrialization transformed Brazil into a producer of cars, computers, and aircraft, but profligate spending produced heavy debts in the 1980s. International lenders demanded belt tightening in return for rescheduling and a steep recession followed in 1990–1992.

The launching of the new currency, the real, in 1994, was the fifth attempt at monetary stabilization since 1986; it contributed to a dramatic fall in inflation. Economic growth in 1994 boosted regional confidence and facilitated the launch of Mercosur. In 1995 a fractious Congress blocked reforms of the tax and social security systems, but finally agreed to end state monopolies in such sectors as telecommunications and oil, thus reviving the privatization program.

The economy grew strongly through 1996 and 1997, but was seriously threatened by an international financial crisis in 1998. A $41.5 billion rescue package was arranged by the IMF, but foreign currency reserves were seriously drained in a bid to support the real, which was devalued in January 1999 due to speculative pressures. A deep recession was avoided, however, by the successful application over 18 months of tight fiscal and monetary policies which restored domestic and international confidence.

Modest growth was posted in 2001, but the economic meltdown in Argentina and the effects of global downturn brought the value of the real down in 2002. An end to energy rationing promised to revive industrial production and activity, but deregulation of the labor market, reforms of the social security and tax systems, and high debt servicing costs remained concerns.

Brazil is a democratic federal republic with 27 regional parliaments and a national Congress. In 1993, Brazilians voted to retain directly elected presidents.

Profile

Military rule between 1964 and 1985 led to gross human rights abuses, against Amazon Amerindians in particular, and to economic mismanagement, which left Brazil with a legacy of huge debts and inefficient state industries.

Brazil's young democracy is characterized by a weak party system, centered around personalities. Parties do not have set ideological programs, but form shaky coalitions and engage in horsetrading to get legislation through the Congress. The preponderance of small parties and corruption adds to the problems. Former President Collor de Mello was impeached in 1992 on fraud charges.

Dissatisfaction with the center-right provided a boost for the left, led by the influential Luís da Silva, who came second in the 1989 presidential elections. However, his failure to beat Cardoso in 1994 or 1998 revealed a lack of fresh ideas and direction in his Workers' Party. Cardoso, the father of the successful anti-inflation plan for the real, held his shaky coalition together until 2002 and emergency fiscal adjustments saved Brazil from a return to persistent economic crisis. Hard-won stability permitted Brazil to avoid the worst effects of the economic crisis in neighboring Argentina in 2001–2002.

Main Political Issues

Political stability

Cardoso, who was constitutionally barred from seeking a third term in the 2002 presidential elections, has left his mark on politics, since few parties are prepared to deviate far from his largely successful policy mix which has provided stability and boosted consumer and investor confidence. A ruling by the Supreme Electoral Tribunal, instructing parties forming electoral alliance to retain them from the federal level down to the state, promises cleaner campaigns.

Economic management

Rapid recovery from the 1999 currency crisis relied on a tight monetary and fiscal regime backed by a sound macroeconomic policy. This permitted modest growth in 2001 and 2002 despite the global downturn and energy rationing at home. Plaudits from the IMF separated Brazil in investors' minds from the economic turmoil in Argentina. Tax reform and improved energy resources are priorities for the incoming government.

Diplomatic role

Brazil is a leader in South America in the promotion of greater geopolitical unity. Talks with the USA on the proposed Free Trade Area of the Americas (FTAA), and a similar trade area with the EU and Mercosur are among priorities.

Brazil's regional influence recently helped to abort coups in Paraguay and end one in Ecuador, and settle a border dispute between Peru and Ecuador. Brazil has ambitions to act as main broker in future talks with the USA on the FTAA, which is due to be signed in 2005. To bolster its position, it has revived negotiations on a bilateral trade agreement with Mexico, its chief rival for the crown of regional leader. Free trade talks between the EU and Mercosur have raised the prospect of movement by Europe on agriculture, long the main bone of contention between the two regions. Brazil has also strengthened ties with the Andean Community and in 2002 hosted a conference attended by 34 countries invited to join the FTAA.

Brazil's dictatorship ended in 1985, but the military still has an important internal security role, for instance controlling vast regions of the north. The arms industry is large, but Brazil states that it has no intention of using its nuclear energy for military purposes: the Comprehensive Test Ban and Nuclear Non-Proliferation Treaties were signed in 1998.

Membership of the Mercosur trade bloc has led to increased military cooperation with Argentina, Paraguay, and Uruguay. Brazilian troops have participated in UN peacekeeping, most recently in East Timor.

Brazil pumps in gas from Argentina and Bolivia, and has similar plans with Venezuela and Uruguay. Nuclear power has been dogged by controversy and high costs. Hydropower, which already accounts for over 90% of electricity generation, is being expanded further, although output is vulnerable to drought. Producing ethanol from sugar represents an attempt to reduce gasoline imports, and the welcoming of foreign companies in areas of exploration and production is set to increase oil and natural gas reserves. Exploration of the Amazon's biodiversity was brought under government control in mid-2000, with all new ventures involving any living thing requiring official approval.

Federal agencies charged with protecting the Amazon rainforest are underfunded, understaffed, and accused of corruption.

The forest contains an estimated 90% of all the world's plant and animal species. However, 38 million animals a year are smuggled out of the region, and the demands of agriculture are leading to the forest's destruction, usually for cattle pasture and logging, at a rate reaching 23,090 sq. km (8936 sq. miles) a year. As a result, vital genetic diversity is being lost. The government's latest and biggest campaign to stop illegal logging and burning was announced in 2000.

Opencast bauxite mines pollute rivers and threaten indigenous Amerindians, while in 2000 the worst oil spill in 25 years devastated the Iguaçu River. Urban industrial pollution and untreated sewage are major problems.

Air travel is expensive, while roads are clogged in cities and poor outside.

Proposed cross-border projects include a railroad, an intercontinental highway, and a 3442-km (2140-mile) waterway.

Federal health is underfunded. Fewer than 20% of hospitals are state-run, and they need modernization. Private care is beyond the majority. On average only 15% of the health budget goes to child health, immunization, and other preventive programs. However, infant mortality, at 95 per 1000 children in 1970, had dropped to one-third of that level by 2000; access to potable water increased from 74% of the population in 1992 to 79% in 1998. In 2001 international drug companies and the USA dropped patent infringement claims against Brazil for distributing anti-AIDS drugs free to more than 100,000 HIV patients.

The average time spent at school is less than that in other Latin American countries. The portion of GDP spent on education is comparable to that of European countries, but it is misapplied, so that basic primary education remains weak, while many children of wealthy families receive excellent tuition at free public universities. Of Brazil's 95 universities, 55 are administered by the state. Nearly three million children do not attend school at all, especially those living in the northeast and in Amazonia, and the urban poor, including street children. However, the number of seven- to 14-year-olds in school has increased during the last decade. Despite an anti-illiteracy campaign, begun in 1971, the adult illiteracy rate is 15%.

Crime levels are among the world's highest, especially in cities, with armed robbery and narcotics-related crime uppermost. Badly paid police are frequently accused of extortion, violence and the murder of citizens. Death squads, thought to be linked to the police, have targeted street children in major cities. A combination of atrocious conditions and overcrowding mean that violent disturbances in prisons are common. An explosion in muggings and kidnappings was a key issue in the 2002 elections.

In the countryside, landless squatters and indigenous peoples have been wounded and murdered in the process of being driven off land by gunmen funded by large landowners. In Roraima state, the discovery of large gold deposits has led to the homelands of Brazil's largest tribe, the Yanomami, being invaded by thousands of gun-toting prospectors, garimpeiros.

Brazil's income distribution is among the most skewed in the world. IDB figures in 1999 showed that the richest 10% of the population take 50% of the income and the poorest 50% only 10%. Governments have failed to tackle the problem of homelessness and street children in large cities. An estimated one to five million families remain landless, while nearly 80% of farmland is owned by 10% of landowners. In July 2000 the government announced that vast tracts of land of unproven ownership would be redistributed, but widespread invasions by landless workers have continued.

Brazil is under-performing in tourism, with revenues equivalent to 2.5% of GDP in 1996, compared with a world average of around 10%. The situation is slowly improving.

Such attractions as Atlantic beaches stretching 2000 km (1200 miles), the Amazon river basin, the Pantanal – the vast wetland region in the west, and world famous carnivals are offset by the limited availability of medium- to low-cost travel and budget hotels, which deters domestic and foreign travelers.

In the virtual absence of low-cost charter flights domestic air travel is expensive. This is blamed on high airport charges and inertia in Brazil's aviation department, which is controlled by the air force.

Average overnight hotel rates are higher than in Europe and the USA, and the quality of service is generally poor. Basic infrastructure, such as sanitation and water supply, is also deficient.

The first Portuguese, Pedro Alvares Cabral, arrived in Brazil in 1500. By the time Portugal took control of the region, in 1580, it was a thriving colony drawing its wealth from sugar plantations in the northeast, worked by imported Africans, or Amerindians captured from further and further inland.

• 1637–1654 Dutch control sugar-growing areas.
• 1763 Rio becomes capital.
• 1788 Inconfidência rebellion, led by Tiradentes, fails.
• 1807 French invade Portugal. King João VI flees to Brazil with British naval escort. In return, Brazil's ports opened to foreign trade.
• 1821 King returns to Portugal. Son Pedro made regent of Brazil.
• 1822 Pedro I declares independence and is made Emperor of Brazil.
• 1828 Brazil loses Uruguay.
• 1831 Military revolt after war with Argentina (1825–1828). Emperor abdicates. Five-year-old son succeeds him as Pedro II.
• 1835–1845 Rio Grande secedes.
• 1865–1870 Brazil wins war of Triple Alliance with Argentina and Uruguay against Paraguay.
• 1888 Pedro II abolishes slavery; landowners and military turn against him.
• 1889 First Republic established. Emperor goes into exile in Paris. Increasing prosperity as result of international demand for coffee.
• 1891 Federal constitution established.
• 1914–1918 World War I causes coffee exports to slump.
• 1920s Working-class and intellectual movements call for end to oligarchic rule.
• 1930 Coffee prices collapse. Revolt led by Dr. Getúlio Vargas, the "Father of the Poor," who becomes president. Fast industrial growth.
• 1937 Vargas's position as benevolent dictator formalized in "New State," based on fascist model.
• 1942 Declares war on Germany.
• 1945 Vargas forced out by military.
• 1950 Vargas reelected president.
• 1954 USA opposes Vargas's socialist policies. The right, backed by the military, demand his resignation. Commits suicide.
• 1956–1960 President Juscelino Kubitschek, backed by Brazilian Labor Party (PTB), attracts foreign investment for new industries, especially from USA.
• 1960–1961 Conservative Jânio da Silva Quadros president. Tries to break dependence on US trade.
• 1961 Brasília, built in three years, becomes new capital. PTB leader, João Goulart, elected president.
• 1961–1964 President's powers briefly curtailed as right wing reacts to presidential policies.
• 1964 Bloodless military coup under army chief Gen. Castelo Branco.
• 1965 Branco assumes dictatorship; bans existing political parties, but creates two official new ones. He is followed by a succession of military rulers. Fast-track economic development, the Brazilian Miracle, is counterbalanced by ruthless suppression of left-wing activists.
• 1974 World oil crisis marks end of economic boom. Brazil's foreign debt now largest in world.
• 1979 More political parties allowed.
• 1980 Huge migrations into Rondônia state begin.
• 1985 Civilian senator Tancredo Neves wins presidential elections as candidate of new liberal alliance, but dies before taking office. Illiterate adults get the vote.
• 1987 Gold found on Yanomami lands in Roraima state; illegal diggers rush in by the thousand.
• 1988 New constitution promises massive social spending but fails to address land reform. Chico Mendes, rubber-tappers' union leader and environmentalist, murdered.
• 1989 Brazil's first environmental protection plan drawn up. Yearly inflation reaches 1000%. Fernando Collor de Mello wins first fully democratic presidential elections.
• 1992 Earth Summit in Rio. Collor de Mello resigns and is impeached for corruption.
• 1994–1995 Plan Real ends hyperinflation. Congress resists constitutional reforms, but passes key privatizations of state monopolies.
• 1998–1999 Fernando Henrique Cardoso, in power since 1995, reelected president. Real devalued in economic crisis.
• 2000– 2002 Economy in state of continuing recovery.