Multimedia Mania/abacus-multimedia-mania.iso/dp/0011/00117.txt

Text File | 1993-07-27 | 42KB | 716 lines

$Unique_ID{bob00117}
$Pretitle{}
$Title{Brazil
Front Matter}
$Subtitle{}
$Author{Richard F. Nyrop}
$Affiliation{HQ, Department of the Army}
$Subject{percent
brazil
billion
military
government
foreign
imf
brazilian
country
economic
see
pictures
see
figures
}
$Date{1982}
$Log{See Statue over Buenos Aires*0011701.scf
See Global Map*0011702.scf
See Figure 1.*0011703.scf
}
Title:       Brazil
Book:        Brazil, A Country Study
Author:      Richard F. Nyrop
Affiliation: HQ, Department of the Army
Date:        1982

Front Matter

[See Statue over Buenos Aires: Artist's Rendition.]

Foreword

     This volume is one of a continuing series of books written by Foreign
Area Studies, The American University, under the Country Studies Area Handbook
Program. The last page of this book provides a listing of other published
studies. Each book in the series deals with a particular foreign country,
describing and analyzing its economic, national security, political, and
social systems and institutions and examining the interrelationships of
those systems and institutions and the ways that they are shaped by cultural
factors. Each study is written by a multidisciplinary team of social
scientists. The authors seek to provide a basic insight and understanding of
the society under observation, striving for a dynamic rather than a static
portrayal of it. The study focuses on historical antecedents and on the
cultural, political, and socioeconomic characteristics that contribute to
cohesion and cleavage within the society. Particular attention is given to
the origins and traditions of the people who make up the society, their
dominant beliefs and values, their community of interests and the issues
on which they are divided, the nature and extent of their involvement with
the national institutions, and their attitudes toward each other and toward
the social system and political order within which they live.

     The contents of the book represent the views, opinions, and findings
of Foreign Area Studies and should not be construed as an official Department
of the Army position, policy, or decision, unless so designated by other
official documentation. The authors have sought to adhere to accepted
standards of scholarly objectivity. Such corrections, additions, and
suggestions for factual or other changes that readers may have will be
welcomed for use in future new editions.

William Evans-Smith
Director, Foreign Area Studies
The American University
Washington, D.C. 20016

Acknowledgments

     The authors are grateful to numerous individuals in various agencies of
the United States government and in international and private organizations in
Washington, D.C. who gave of their time, research materials, and special
knowledge on Brazilian affairs to provide data and perspective. The authors
also wish to express their gratitude to members of the Foreign Area Studies
staff who contributed directly to the preparation of the manuscript. These
include Kathryn R. Stafford, Dorothy M. Lohmann, and Andrea T. Merrill, who
edited the manuscript and the accompanying figures and tables; Harriett R.
Blood and Farah Ahannavard, who prepared the graphics; and Margaret Quinn, who
typed the manuscript. The authors appreciate as well the excellent assistance
provided by Gilda V. Nimer, staff librarian; Ernest A. Will, publications
manager; and Eloise W. Brandt, administrative assistant. It should be noted
that Robert Rinehart contributed the sections on geography, population,
education, and welfare to Chapter 2 and that P.A. Kluck wrote the agriculture
section for Chapter 3.

     Special thanks are owed to Marty Ittner, who designed the cover and the
illustrations of the title page of each chapter. The inclusion of photographs
in this study was made possible by the generosity of various individuals and
private and public agencies. The authors acknowledge their indebtedness to
those who provided original work not previously published.

Preface

     On November 15, 1982, an overwhelming majority of eligible Brazilian
voters participated in elections to select state governors, members of the
bicameral legislature, hundreds of mayors, and thousands of local council
members. Although the government party retained control of the body that in
1984 will elect the next president, the opposition parties scored significant
victories. The elections were the first held since the military seized power
in 1964 and were a critical part of the process of increased political
participation-known as abertura-to which President Joao Baptista de Oliveira
Figueiredo seemed to be committed. In the aftermath of the elections, however,
the government and the people continued to confront perhaps the worst economic
crisis in the nation's history.

     Brazil: A Country Study replaces the Area Handbook for Brazil published
in 1975. Like its predecessor, the present book is an attempt to treat in a
compact and objective manner the dominant historical, social, economic,
political, and national security aspects of contemporary Brazil. Sources of
information included scholarly books, journals, and monographs; official
reports and documents of governments and international organizations; foreign
and domestic newspapers and periodicals; and interviews with individuals with
special competence in Brazilian affairs. Relatively up-to-date economic data
were available from several sources, but the sources were not always in
agreement.

     Chapter bibliographies appear at the end of the book; brief comments on
some of the more valuable sources for further reading appear at the conclusion
of each chapter. Measurements are given in the metric system; a conversion
table is provided to assist those who are unfamiliar with the metric system
(see table 1, Appendix). The Glossary provides brief definitions of terms that
may be unfamiliar to the general reader.

Country Profile

[See Global Map: Brazil on the map of the globe.]

Country

     Formal Name: Federative Republic of Brazil (Republica Federativa do
Brasil).

     Short Form: Brazil.

     Term for Citizens: Brazilian(s).

     Capital: Brasilia.

Geography

     Size: Approximately 8,511,965 square kilometers-fifth largest in world
and encompasses almost half of South American continent.

     Topography: Landmass dominated by Amazon Basin and Central Highlands.
Amazon drainage system by far largest in world. Principal mountain ranges
parallel Atlantic coast.

     Climate: Equatorial climate characteristic, although heat and humidity
not extreme. Moderate climatic conditions in plateau regions, and frosts and
occasional snow in South.

Society

     Population: Census of 1980 recorded slightly over 119 million; annual
rate of growth estimated 2.47 percent in early 1980s, and population late 1982
nearly 125 million, making Brazil sixth most populous country in world.

     Education and Literacy: Education theoretically compulsory through eight
grades of primary level, but majority drop out after fourth grade. Government
claims some 75 percent of those 10 years of age and older are literate, but
most observers suggest 40 percent literacy more realistic figure.

     Health and Welfare: Health care personnel and facilities generally
concentrated in urban areas; care in rural areas confined to understaffed
clinics operated mostly by paramedical personnel.

     Language: Portuguese, official language, spoken by all but a few
Amerindians, who retain their languages, and immigrants who have not yet
acquired proficiency in Portuguese. English, French, and Spanish second
languages among business elite and small upper class.

     Ethnic Groups: Although majority racially mixed, government uses figures
of 55 percent white, 38 percent mixed, and 6 percent black; Indians, Asians,
and others make up the remainder.

     Religion: Estimated 90 percent baptized Roman Catholic, making Brazil
largest Catholic country in world. Substantial number also participate in
Afro-Brazilian cults. Protestants, especially of evangelical sects, increased
dramatically during 1960s and 1970s.

Economy

     Gross National Product: Equivalent of US$250 billion in 1981, about
US$2,000 per capita in a year of recession. Economy had sustained rapid growth
since 1940s, but by early 1980s balance of payments constraints required
contraction and austerity for near future.

     Agriculture: Contributed 10 percent of gross domestic product (GDP) in
1980. Main crops: manioc, beans, and corn for domestic consumption; coffee,
sugarcane, soybeans, cotton, and oranges for export and domestic use.

     Industry: Contributed 38 percent of GDP in 1980. Industrialization
increased rapidly after 1940s. By 1980s produced most industrial items,
including custom-built machinery, airplanes, automobiles, and military
equipment. Large mineral deposits, except oil and coal, being exploited-partly
for export. In 1980 produced nearly 13 million tons of pig iron, 15 million
tons of crude steel, and 27 million tons of cement.

     Exports: US$23.3 billion in 1981. Over half manufactured goods, including
processed agricultural commodities, such as sugar, instant coffee, and soybean
oil. Exports of machinery, vehicles, other consumer durables, and military
equipment growing.

     Imports: US$22.1 billion in 1981, of which US$11 billion was fuel
(essentially crude oil). Dependent on imports for 75 percent of petroleum
supply. Imported wide range of intermediate products, such as chemicals and
metals. Imported capital goods significant. Wheat main consumer import.

     Balance of Payments: Deteriorated in 1982 and required emergency aid.
Large foreign debt. Debt service will impose payment constraint at least to
mid-1980s, requiring period of austerity.

     Exchange Rate: Averaged 93.12 cruzeiros per US$1 in 1981. Cruzeiro
frequently devalued by small amounts.

     Fiscal Year: Calendar year.

     Rate of Inflation: 110 percent in 1980 and 95 percent in 1981.

Transportation and Communications

     Transportation System: Integration of various parts of country started
only since 1940s. In 1982 large areas remained inaccessible. Road network most
developed but maintenance a problem. In late 1970s about 70 percent of
domestic freight and over 90 percent of passenger traffic moved by highway;
rail freight about one-sixth of total. Coastal and inland shipping accounted
for most of remainder. Air flight necessary to reach many outposts in
reasonable time.

     Railroads: About 24,600 kilometers, of which 22,450 kilometers meter
gauge (1.0 meter); 1,750 kilometers 1.6 meter gauge; 200 kilometers standard
gauge (1.4 meters); and 200 kilometers 0.76 meter gauge. About 1,000
kilometers electrified. Rail lines mostly built before 1920s to move exports
to ports. No national system. Over 80 percent of rail lines in South and
Southeast link major areas and adjoining countries. In 1978 total rail freight
64 billion ton-kilometers, less than half of which carried by government
railroads. Iron ore main cargo on private lines.

     Roads: About 1.4 million kilometers, of which 83,700 kilometers paved and
rest gravel or dirt. Federal highway system about 5 percent of total, state
roads 8 percent, and remainder municipal roads or dirt tracks. About 60
percent of federal roads paved, forming base of interstate system under
construction. Brazil borders all but two South American countries, but only in
southern regions are links to adjoining countries adequate; in North and
Center-West roads to adjoining countries barely passable or only planned.

     Inland Waterways: Some 50,000 kilometers navigable. Main form of
transportation in many parts of Amazon Basin. In 1978 about 10 percent of
freight carried by coastal and inland shipping.

     Ports: Eight major and 23 minor ports of significance.

     Pipelines: Approximately 2,000 kilometers for crude oil, 465 kilometers
for refined products, and 257 kilometers for natural gas. In 1978 pipelines
accounted for nearly 3 percent of total freight traffic.

     Airfields: 3,633 rated usable, and about 1,100 more rated possible,
presumably meaning subject to weather and other conditions: 220 had permanent
surface on runways. Only one runway over 3,659 meters, 17 with runways between
2,440 and 3,659 meters, and 412 fields with runways between 1,220 and 2,439
meters.

     Communications: Good radio and fair telecommunications systems. Ten
domestic satellite stations and one international satellite, plus two coaxial
submarine cables for international traffic. About 6.5 million telephones,
approximately five per 100 of population.

Government and Politics

     Government: 1967 Constitution, extensively amended, in force in 1982.
Formally a federative republic, although central government increasingly
dominates governments of 23 states, three territories, and Federal District
(which contains capital, Brasilia). Central government power concentrated in
president, 21-member cabinet, and a number of executive agencies. Bicameral
legislature (69-member Senate and 479-member Chamber of Deputies) relatively
weak. Independent judiciary headed by Supreme Federal Tribunal. State
governments headed by governors, with unicameral state assemblies and
independent judiciaries. Some 4,000 local governments headed by mayors (or
prefects) and contain quasi-legislative local councils and local courts.

     Politics: Military-dominated system undergoing process of gradual
liberalization toward civilian-dominated liberal democracy (popularly known as
abertura). Popular elections in 1982 for governors, senators, deputies, state
assemblymen, most mayors, and local councilmen. Indirect presidential election
(by electoral college) scheduled for 1984. Two dominant political parties:
government Democratic Social Party (Partido Democratico Social-PDS) and
opposition Brazilian Democratic Movement Party (Partido do Movimento
Democratico Brasileiro-PMDB). Political participation by interest groups
limited but growing under abertura. In 1982 military and technocratic elite
remained dominant.

     Foreign Relations: Traditionally United States oriented, but increasingly
diverse pragmatic policy orientation; often cast as a leader of Third World.
Foreign policy dominated by trade concerns. Highly active and professional
Ministry of Foreign Affairs popularly known as Itamaraty.

     International Agreements and Memberships: Party to Inter-American Treaty
of Reciprocal Assistance (Rio Treaty), though to neither Treaty of Tlatelolco
or Treaty on the Non-Proliferation of Nuclear Weapons. Memberships in
international organizations many and varied: United Nations and specialized
agencies, Organization of American States and specialized agencies, Latin
American Integration Association, other regional trade and cooperation
organizations, international commodity agreements, and multilateral lending
institutions.

National Security

     Armed Forces: Total strength in 1982 about 273,000-army. 183,000; navy,
47,000; and air force 43,000. Conscripts numbered 134,000; slightly under
2,000  in navy, remainder in army. Conscript tour, one year; most serve only
nine or 10 months. Women not conscripted.

     Military Units. Four field armies and two territorial commands covered
entire country, subdivided into 11 military regions. Combat units included
eight divisions, five independent brigades, and five jungle units of varying
size. Navy, operating through six naval districts and one fleet command, built
its combat capability around one aircraft carrier, six frigates, 12
destroyers, eight submarines, and several patrol craft. Naval air capability
restricted to helicopters. Air force flew about 600 aircraft in five
operational commands-Air Defense Tactical, Maritime, Transport, and
Training-deployed in six air districts. Air force pilots flew carrier-based,
fixed-wing aircraft.

     Equipment: Aging armaments of United States origin being replaced by
thriving indigenous arms industry. Small arms and ammunition, armored
vehicles, planes, and ships produced locally. Brazilian weapons and equipment
appearing in substantial quantities in armed forces of other Latin American
countries as well as in Africa and Middle East. Projected acquisitions for
scheduled modernization program of 1980s included armored vehicles for army,
corvettes for navy, and combat aircraft for air force.

     Police: Department of Federal Police (numbering about 185,000),
countrywide police force, engaged in investigation and apprehension of
criminals and prevention of crime. Military Police, nominally under state
supervision but actually controlled by Ministry of Army, provided militarized
police force throughout country and constituted well-trained paramilitary
force available to federal authorities.

[See Figure 1.: States and Territories, 1982]

Introduction

     Brazil in the early 1980s remained a land of vast ethnic and regional
diversity and startling geographic and socioeconomic contrasts. Encompassing
almost half the South American continent and bordering every South American
country except Ecuador and Chile, Brazil ranks as the fifth largest nation in
the world, exceeded only by the Soviet Union, China, the United States, and
Canada. Its population in early 1983 was about 125 million-sixth largest in
the world-and because approximately 90 percent of all Brazilians are
Catholics, it is the largest Roman Catholic nation in the world. It is the
only Portuguese-speaking Latin American state, and its Luso-Brazilian culture
differs in subtle ways from the  Hispanic heritage of most of its neighbors.
During the late nineteenth and early twentieth centuries, millions of
Italians, Germans, Slavs, Arabs, Japanese, and other immigrants entered and in
various ways altered the dominant social system, but their descendants are
nearly all Portuguese-speaking Brazilians. For example, Diario Nippak, a Sao
Paulo newspaper directed to the large Japanese-Brazilian community of that
city, is published in Portuguese (see Ethnic Patterns, ch. 2).

     The nation's economic base is equally varied. In the early 1980s Brazil
produced more sugar than any other nation and was by far the largest producer
of alcohol, mostly from sugarcane (see Energy, ch. 3). It was the third
largest exporter of agricultural commodities-both raw and processed-ranking
first in coffee and orange juice concentrate, second in cocoa and soybeans,
and fourth in sugar and bulk tobacco (see Agricultural Exports, ch. 3).

     This large agricultural sector nevertheless constituted only 10 percent
of the gross domestic product (GDP) in 1980, whereas industry contributed 38
percent. Only four industrialized countries had as large a share of GDP
contributed by industry, and only eight developed nations exceeded the
absolute value of Brazil's industrial output. Its steel and chemical
industries were, respectively, the tenth and seventh in the world, and in 1982
Brazil achieved sixth place in the export of military equipment (see Defense
Industry, ch. 5). Its earnings from military exports reportedly reached US$2.4
billion in 1982, roughly 10 percent of all export earnings. And several
Brazilian firms were competing successfully in the world market in sales of
commercial aircraft, computers, and other high technology items and in a wide
range of construction projects. Exports of transportation equipment, for
example, increased from US$8 million in 1965 to US$2 billion in 1981.

     The country possesses a wealth of natural resources. It has one of the
largest forest reserves in the world, and its vast river systems not only
serve as a transportation network but also provide an enormous potential
energy source. The world's largest hydroelectric project-the Itaipu Dam,
located on the Rio Parana on the border between Brazil and Paraguay-was
scheduled to enter operation in late 1983 (see fig. 3). Additional generators
scheduled for installation in the late 1980s will give the project a capacity
of 12.6 million kilowatts (see Energy, ch. 3).

     Brazil's iron ore deposits were the second largest in the world, and its
bauxite and manganese deposits were reputed to be among the largest. In
addition to what may be the world's largest gold deposit, the country
contains extensive deposits of tin, lead, nickel, chromite, beryllium, copper,
and a wide variety of other minerals (see Mining, ch. 3).

     The country was seriously deficient, however, in one critical resource:
fossil fuels. Its coal reserves, about 22.8 billion tons, consisted for the
most part of low-quality coal that required costly processing before use, and
more than half the coal mined was lost in processing. The proven oil reserves
were small, as were those of natural gas. In 1981 the country required about 1
million barrels of oil per day, and about 75 percent of that requirement had
to be imported at a cost of approximately US$11 billion, roughly 50 percent of
the total import bill.

     Until the 1970s oil imports had not posed a serious problem to the
economy. In 1973, however, the Organization of Petroleum Exporting Countries
(OPEC) achieved an increase in the unrealistically low prices for oil on the
world market, and the increase contributed to the abrupt slowdown of Brazil's
"economic miracle," which had started in the late 1960s (see Growth and
Structure of the Economy, ch. 3). When in 1979 OPEC again sharply raised world
oil prices, Brazil's economy was severely damaged. Brazil has historically
experienced balance of payments difficulties, and the new huge payments for
imported oil soon created crisis conditions. The government adopted various
remedial measures, such as seeking to reduce imports, but it also increased
its already high level of foreign loans (see Balance of Payments, ch. 3).
Significant increases in international interest rates in the late 1970s and
early 1980s literally compounded Brazil's problems. Net interest payments on
the foreign debt grew from US$124 million in 1970 to US$6 billion in 1980 and
US$9.2 billion in 1981. The increasing reluctance of international bankers to
advance new loans to Brazil (and other nations with large debts) and the less
than anticipated increase in the country's exports because of a widespread
recession in many parts of the world created a payments crisis in late 1982.
Only through emergency aid was default on current obligations avoided.

     On December 1, 1982, during a visit to Brazil, President Ronald Reagan
announced the provision of US$1.2 billion in United States Treasury funds for
three months; Brazilian officials immediately used this to pay debts due.
Additional short-term bridging loans were arranged with various international
banks. United States and International Monetary Fund (IMF) officials
encouraged large banks to put together the necessary funds to cover Brazil's
immediate foreign exchange crisis. In addition, Brazil applied for and
received IMF approval for US$1.1 billion of IMF funds under its compensatory
financing facility and US$4.9 billion of IMF funds over three years under its
extended fund facilities. Drawings on these loans started in early 1983.

     On December 30, 1982, Brazilian officials notified foreign creditors that
payments on the principal of the country's external debt coming due in 1983
would be suspended. Technically, the suspension covered only the early months,
but it was generally understood that the suspension would apply to the whole
year. In effect Brazil avoided defaulting on its foreign obligations but
forced a rescheduling of amortization payments; the suspended principal
payments became payable over eight years with a two-and-one-half-year grace,
period, i.e., to mid-1985. Interest payments, reportedly a little over US$10
billion in 1983, would be made, but only if international bankers rolled over
US$4 billion in short- and medium-term debts due in 1983, advanced US$4.4
billion in new loans, continued about US$8.8 billion in short-term trade-
related financing, and restored credit lines of foreign branches of Brazilian
banks to the level of mid-1982. In early 1983 Brazilian officials reported
foreign bank commitments for nearly the whole year's credit needs. At the end
of 1982 some observers concluded that Brazil's short- to long-term external
debt amounted to about US$80 to US$83 billion, including a short-term debt of
US$11 billion reported by the Central Bank of Brazil. Other officials
indicated that the short-term debt was around US$16 to US$19 billion, making
the total external indebtedness around US$90 billion.

     The use of the IMF's extended fund facilities required examination and
approval of Brazil's economic program by IMF officials. The main outlines of
Brazilian policy for 1983 were announced after meeting with IMF officials.
Growth of the GDP was expected to be only about 1 to 2 percent compared with
probably zero growth in 1982. A consolidated federal budget was to be used to
reduce spending, particularly investments by public sector entities. The
public sector deficit was to be reduced to about 3.5 percent of GDP in 1983
compared with about 6.5 percent in 1982. Prices of electricity, steel
products, and public services were to be increased substantially. By December
1983 inflation was to be reduced to about 70 percent above December 1982,
compared with about a 95 percent increase during 1982.

     Goals for the balance of payments in 1983 included a surplus of exports
over imports of about US$6 billion. Frequent small devaluations of the
exchange rate were to be greater than the rate of inflation to stimulate
exports, but the trade surplus was to be achieved largely through the tight
controls to reduce imports. The trade surplus would permit a reduction of the
current account deficit from about US$14 billion in 1982 to below US$7 billion
in 1983. These goals were based on the expectation that Brazil realistically
would only be able to increase foreign borrowing by about US$10 billion in
1983 compared with about US$17 billion in 1982. Many observers thought that
the government's balance of payments projection for 1983 was optimistic.

     Although the program agreed to by Brazilian and IMF officials for 1983
was largely that adopted by Brazil before seeking IMF loans, it imposed
considerable austerity on the economy following difficult years in 1981 and
1982. Observers believed that reduced public investment and cutbacks in
imports would adversely affect industry. Moreover, economists expected the
balance of payments constraints to require continued economic asceticism
through the mid-1980s. If the structure of the economy and international
conditions have not changed sufficiently by then, the grace period in debt
rescheduling would have expired, and officials would confront additional debt
service burdens.

     The government's somber measures, particularly the phasing out of
numerous direct and indirect subsidies in the 1983-85 period, will worsen the
plight of the majority of the population for at least the short term.
Relatively few Brazilians have derived significant direct benefits from the
recurrent economic "booms," but most have suffered from the ensuing "busts."
In the early 1980s income distribution remained skewed to the small middle
and upper classes. In a 1978 review of post-1964 economic programs and their
attendant social costs, analyst Peter Flynn concluded that the allocation of
resources had gone "not to the weaker and poorer sections of Brazilian
society, but rather to the middle and upper classes, with the distribution of
wealth worsening over the years, both between classes and between regions, the
rich becoming richer, the poor, poorer," In 1960 the top 5 percent of the
economically active population secured nearly 28 percent of the national
income, whereas the bottom 50 percent garnered less than 18 percent. According
to E. Bradford Burns, by 1980 approximately 40 percent went to the top 5
percent, but less than 12 percent went to the bottom 50 percent.

     The data on income distribution were consonant with other social
indicators. In the early 1980s some 60 percent of all adults were illiterate,
and about the same percentage of the total population were malnourished. In
the state of Rio de Janeiro fully one-third of the citizens lived in slums
and shantytowns known as favelas. In the city of Sao Paulo and its expanding
suburbs-Greater Sao Paulo-an estimated two-thirds of the residents live
in favelas. Between 1961 and 1975 infant mortality in Greater Sao Paulo
increased from 61 per 1,000 live births to 95 per 1,000. Yet living
conditions in Sao Paulo-the largest South American metropolis-were on the
whole better than in such chronically depressed areas as the Northeast (see
fig. 1). The Sao Paulo archdiocese estimated in 1982 that nationwide about 40
percent of all youngsters under the age of 18 either had been abandoned or
were living in conditions of severe deprivation. The reduction or elimination
of subsidized prices for food staples and fuel, as examples, could be
catastrophic for those whose existence was already marginal (see Urbanization,
ch. 2).

     It was difficult in early 1983 to foresee what consequences the grim
economic situation might have on the process of political liberalization-known
as abertura-that had been under way since the mid-1970s. Some observers
speculated that the military government headed by President Joao Baptista de
Oliveira Figueiredo might feel compelled to retain power and responsibility
until the economy improved. Other observers opined that the prospect of
economic bad news for much of the late 1980s might prompt the military to
return power to civilians. The popular elections held in November 1982 were
an essential element in the process of phasing out the military dictatorship
and reinstituting a liberal democratic system. The two major parties in the
election were the government Democratic Social (Partido Democratico
Social-PDS) and the opposition Brazilian Democratic Movement Party (Partido do
Movimento Democratico Brasileiro-PMDB). The electorate selected senators, all
members of the Chamber of Deputies, governors, members of the state
legislatures, mayors, and members of city councils. The PDS ended up with 46
seats in the Senate, exactly two-thirds of the membership of that body, and
234 seats in the Chamber of Deputies. The PMDB ended up with 21 seats in the
Senate and 200 seats in the Chamber of Deputies. The PDS failed to secure an
absolute majority in the Chamber of Deputies but retained control of the
electoral college-to consist of all members of Congress and six members
selected by and from each of the 23 state legislatures-that will elect
Figueiredo's successor in October 1984 (see Elections under Military Rule, ch.
4). In other words, if the military government retains control of the PDS at
the time of the 1984 election, it can either remain in power or allow the
resumption of civilian rule.

     Even should the armed forces "return to barracks" in 1985, it would not
mean that the military had renounced participation in political affairs and
had abdicated its position as the society's most influential political
interest group. The armed forces have frequently intervened in political
affairs, and until the 1964 coup those interventions had evoked general
public support and had been viewed as constitutionally sanctioned. The
establishment of the republic in 1889 was triggered by a military uprising,
and military leaders-meaning for the most part senior army generals- played
decisive roles in the formation of a dictatorship by Getulio Vargas
beginning in 1930 and the termination of that dictatorship in 1945 (see The
First Republic; The Vargas Era, 1930-45; The Interregnum, ch. 1).

     During the immediate post-World War II period, the military elite
formulated the notion that national security, which was their primary
concern, entailed not simply the protection of the nation's borders and coasts
from invaders but also included a concern with economic development, internal
security, and the general well-being of the society. These ideas became the
focus of study at the Superior War College (Escola Superior de Guerra-ESG),
which was founded in 1949. Its founders anticipated that the ESG would perform
"the functions of the U.S. Industrial College of the Armed Forces and the
National War College" but would place an "emphasis on internal aspects of
development and security" far beyond that of the American military schools.
According to specialist Alfred Stepan, a 1963 decree stipulated that the ESG
would "prepare civilians and military to perform executive and advisory
functions especially in those organs responsible for the formulation,
development, planning, and execution of the politics of national security."
By 1983 virtually all senior military officers and numerous influential
civilians had attended the ESG and continued to participate in ESG-sponsored
lectures and symposia, and the school remained one of the more influential
institutions in the country.

     In common with his four military predecessors, President Figueiredo
entered office as a four-star general who had excelled in the army's rigorous
merit system, including completion of the course at the ESG. Although
relatively little is known publicly about the procedure, his elevation to the
presidency followed politicking within the armed forces hierarchy,
particularly among the members of several interlocking military bodies. One
such body was the Army High Command, which was composed of the 10 four-star
generals on active duty (see Army, ch. 5). Four of the members were the
commanding generals of the four field armies; also included were the minister
of the army, the chief of the Armed Forces General Staff (Estado-Maior das
Forcas Armadas-EMFA), the army chief of staff, and the chief of the National
Intelligence Service (Servico Nacional de Informacoes-SNI). (Figueiredo's
position immediately before assuming the presidency had been chief of the SNI,
and President Emilio Garrastazu Medici had also held the post before serving
as president from 1969 to 1974. In early 1983 General Octavio Aguiar de
Medeiros was serving as SNI chief.)

     Another small but powerful body was the High Command of the Armed Forces
(Alto-Comando das Forcas Armadas), which by law is to counsel the president
on matters "related to military policy and the coordination of subjects
pertinent to the Armed Forces." Its members consist of the chief of staff of
the armed forces, the three service ministers, and the three service chiefs
of staff. In 1969 the High Command in effect selected the next president. It
conducted an informal poll of officers down to and including colonels and
navy captains and then decided on Medici.

     The National Security Council (Conselho de Seguranca Nacional-CSN
includes the president as chairman, the members of his cabinet, the chief of
EMFA, the three service chiefs of staff, and the vice president. Some
observers believed that the CSN was so large as to be unwieldy and that
Figueiredo relied more heavily on informal and ad hoc meetings with various
members of the High Command and the Army High Command. The first among equals
within his cabinet seemed to be Antonio Delfim Netto, the minister-chief of
the Planning Secretariat of the Presidency and the so-called economic czar.
General Medeiros as chief of the SNI was a key member of the cabinet, as was
Brigadier General Rubem Carlos Ludwig, chief of the Military Household (Casa
Militar) and as such a key liaison to the military leaders.

     The presence of military officers throughout the federal government and
in the 23 states and three territories remained conspicuous. An army general
headed the 185,000-man federal police force, and active-duty army officers
served at various levels. Army officers also commanded many of the state
police forces, and active or retired officers headed numerous autonomous or
semiautonomous government agencies (see Federal Police; State Police; Economic
and Social Rule, ch. 5).

     In addition to its traditional role as moderator of political strife
and its pervasive presence and influence throughout society, which may be
expected to continue, the military elite will probably remain influential
because of the weakness of the nation's political parties and interest groups.
Regional and national politics traditionally have centered on individuals
rather than on party platforms (see Interest Group Politics, ch. 4). This
apparently remained true in the 1982 elections. Despite the expanding role of
numerous government agencies in responding to public needs, the heritage of
paternalism-popularly known as coronelismo-remained strong, especially in
rural areas (see Rural Society, ch. 2). Groups that represent huge and often
overlapping segments of society-such as labor, urban migrants, and
Afro-Brazilians-have experienced only occasional and local success in
achieving their goals of social and economic equity (see Afro-Brazilians, ch.
2). It nonetheless seemed certain that during the 1980s they would intensify
their efforts to gain increased political participation and larger economic
rewards.

February 1983

                                   *  *  *

     The period from February to mid-September was one of continuing national
crises and regional disasters. Parts of the South and of the southern reaches
of the Center-West experienced unprecedented rainfall and flooding, and the
Northeast entered the fifth year of the most devastating drought in over a
century. In August the governor of Ceara, a state in the Northeast, reported
that an estimated 25 percent of all infants were dying of malnutrition or
starvation before they reached one year of age and that the mortality rate
could reach 40 percent within a matter of weeks. The economy entered its
fourth year of the most severe depression in over half a century. In April
hungry and unemployed people rioted in the streets of Sao Paulo and Rio de
Janiero, and during the first week of September crowds of slum dwellers in Rio
raided and looted more than 50 food stores.

     In May the IMF declared that because Brazil had failed to adhere to the
terms of the austerity program that it had adopted as the quid pro quo for
US$4.9 billion of IMF loan funds, Brazil could no longer draw from that
account. By July inflation was running at over 127 percent, and the
government's deficit was 26 percent above the level Brazil had agreed on with
the IMF. An IMF team visited Brasilia to impress on government officials the
necessity of implementing a rigid austerity program in exchange for a
resumption of IMF loan funds. Commercial banks in the United States and
Western Europe announced that they would extend no additional credit unless
Brazil and the IMF reached an accord. Despite these clear warnings, or perhaps
as a result of them, numerous prominent Brazilians both in and out of the
government urged that Brazil declare a moratorium on all loan payments. Vice
President Antonio Aureliano Chaves de Mendonca, viewed by many as a possible
government party candidate in the 1984 presidential election, called for at
least a temporary moratorium, and Celso Furtado, a Brazilian professor of
economics at the Sorbonne and adviser to the opposition PMDB, declared that
Brazil was already "in a tacit moratorium, and that's the worst kind because
the terms are being set by the creditors."

     The IMF nevertheless continued to apply pressure for an austerity program
to be spelled out in a new "letter of intent" that Brazil would have to sign
before IMF and other loan funds would become available. On September 2 Carlos
Langoni, the governor of the Central Bank of Brazil, resigned because he
believed that Brazil would not be able to meet the terms insisted on by the
IMF. In his letter of resignation, Langoni declared that it was "essential
that the new Letter of Intent mirror the necessary balance between external
credibility and internal viability."

     On September 15 Brazilian officials signed the letter of intent and
thereby became eligible to resume drawdowns on the IMF loan fund. The
following week Brazil's commercial creditors were scheduled to meet in New
York under the chairmanship of Citicorp in an effort to pull together a loan
package of US$7 billion. By early September Brazilian and foreign experts had
concluded that Brazil needed US$11 billion to carry it from October 1983
through December 1984. US$7 billion of that amount had to come from commercial
sources, but many bankers doubted that any more than US$6 billion would be
available.

     Many observers also doubted that the government of Brazil would be able
to comply with the austerity measures in the face of fervent public
opposition. In addition to lowering or removing subsidies for various food
items and other staples, the program provided that pay raises must not exceed
80 percent of cost-of-living increases from inflation. The masses were
fiercely opposed to measures of that sort, and the business community disliked
the program's other deflationary provisions. The military government
confronted its most determined challenge.

September 16, 1983

Richard F. Nyrop